COVID-19 leading to uncertainty in the markets

COVID-19 leading to uncertainty in the markets

It is the typical nature of markets and investment values to show modifications and changes daily. Sometimes, the dynamicity can be on an hourly basis too. Investors, by now, have understood the fact that these rapid changes and alterations are normal. Investors have experienced much turmoil by now. They have become confident that even after the bleakest of situations, things do change for the better. There always comes a time when the market situation recovers. This expectation is normal, and it turns true.

But the reason for the market crisis varies every time. Each time we face a new obstruction. The COVID-19 crisis is a relatively new phenomenon that is affecting the market nowadays. This time markets have crashed because of an external cause. If we talk about investment in Equities, there has always been a struggle between the growth opportunities and a plethora of risk factors. Hence, variability is typical to equity investment. It is the difference between periods of sharp falls and steep growth. Thus, when investors invest in Equity, we embrace volatility. Equity can offer us humongous returns only when there is a premium in return for the risk we take.

Investors often commit a grave mistake as they tend to believe that market risks can be associated with business, financial, or economic aspects across the globe. But the recent COVID-19 crisis is different. It has not arisen from these domains. It is an external cause altogether. In the years 2001 and 2008, markets bounced back quite easily. But 2020 is not going to be easy for market situations and investors. COVID-19 is creating havoc in all possible ways, and there's no hope of getting out of this situation any time soon.

It is impossible to predict the future. No one is sure as to what will happen in the future and for how long markets will bear the grunt of COVID-19. The virus is slowly engulfing the entire globe. Till now, we have witnessed the crashing of markets in a few countries. We have no idea where and when this destruction will stop. The consequences of the disease, as well as the impact of the shutdowns, is gradually coming up in front of the world. We are clueless regarding the aftermath of the rampant disease. You can imagine that the mighty Google has asked its 100,000 employees to work from home in the North American region. All employees will be carrying back their laptops to their home. Only a limited number of staff have to come to the office for specific tasks. But they too need to equip themselves with proper precautionary gear. All the tech companies are expected to follow the footsteps of Google super soon.

From when can these employees bounce back to their normal work life? No one knows. Can work from home be a trend? Perhaps yes. This forces us to think about the huge demand for office space and many more amenities. This will be too early to arrive at any conclusion. But the world is certainly shifting towards a mighty change. Now whether this change will be permanent or temporary, only time will tell.

We bring investors and savers, need to acknowledge the fact that this time the crisis is real and uncertain. We are coming across lots of predictions every day. Some are positive, while others are incredibly pessimistic. It depends upon us which side to take. But taking sides will be wrong. The truth is that no one, I repeat, no one knows the actual truth. Being realistic is the best thing that we can do.

We should not panic if possible. In this time of a grave crisis, all we need to remember is that despite this uncontrolled disease, people all across the globe are striving to live and make it every day. Although the lifestyle and other things are changing and getting modified, still economic activities are not going to stop.  Also, bad times are always the best to reveal some good as well as bad in our lives. We will understand which investments are doing better and which investments are failing utterly. We will focus more on adhering strictly to the basics and making quality investments.