A colleague of mine whose son is a motor sports fanatic told me something that the legendary F1 driver Ayrton Senna once said, "When the sun is shining, you can't overtake fifteen other cars but when it's raining you can." For a moment, I was puzzled because obviously it would be much more difficult to drive a race car fast in the rain. It took me a moment to appreciate what Senna had really meant and how it applied to investing. When it started raining and the race track got slippery, everyone would have to slow down but Senna would have to slow down much less than others. On a relative basis, the tough conditions would actually make it easier for someone who was much better than the competition.
In the months and years to come, you are going to see a vivid demonstration of this concept in business and investing. In each industry, even in the badly affected ones like aviation and travel, the strong will come out stronger. Most intelligent investors have realised this by now. That's why even though the markets have fallen a huge amount in aggregate, we keep getting waves of buying when the markets shoot up. It's very clear to real investors (as opposed to traders) that we have a buying opportunity of a lifetime when fundamentally sound businesses are available at low valuations that won't be seen again.
In fact, at Value Research, we have direct proof of investors' eagerness to buy into good stocks at this time of value. We are seeing a boom of new memberships in our premium service, Value Research Stock Advisor. This is a relatively expensive service, although we are currently offering substantial discounts of 40 to 60 per cent. Even then, people are streaming in.
I myself am quite surprised at this enthusiasm. This means only one thing - as soon as the markets started crashing, a lot of visitors to Value Research Online started hunting for great stocks to buy.
Having said all this, it is undeniable that a lot of investors have lost a great deal of money and are genuinely scared at this point. Nothing has happened in the last few weeks that has violated the fundamentals of investing. As far as a lifelong investing strategy goes, the correct position is pretty much what it has been for decades. Even so, the psychological shock has to be dealt with and a way forward found. Deciding on that way forward rationally and sensibly is important. If nothing else, an awareness that blackswan crashes can happen at any time will be of great utility in the future.
However, I would like to emphasise that we are not speaking from a position of prediction or forecasting but of fundamental principles. The next few months are genuinely uncertain. There will also be many false starts. For example, those who have studied past epidemics tell us that there are often two waves to an epidemic. We could be living in a prolonged period during which there are repeated outbreaks and local or even national lockdowns have to be reimposed. None of that is in our individual control. Our primary job is to stay safe and to keep everyone else safe (since the nature of this disease means that your risky actions make everyone else around you unsafe).
And be smart about managing your investments.