Did you read the title and immediately picture two opponents with swords drawn getting ready to battle it out in a fencing match? Well, even if you didn’t, the literal translation for “en garde” is “be on your guard”. You may not be in a literal fight but there are many things that we must guard against when investing during a crisis. There are the obvious precautions, but we are going to delve a little deeper to “guard” your investments. 

PANIC INVESTING

Always guard against making emotional decisions. This is true in normal times, but this is multiplied in a crisis. As you are bombarded with bad news, it is tempting to panic about your investments. This leads investors to do the opposite of what they should — they sell when prices are low and buy when they are high. Now is the time to give yourself more time to evaluate your options in order to make the best decision for your portfolio. Don’t let a temporary fear lead you into permanent pain.

SAME WAYS OF DOING THINGS

No one knows the future, but we can evaluate sectors with the best information that we have.

Most people are not fond of change, and when forced into changing situations, some of us kept our sanity by counting down the days to normality. However, I am reliably informed that some things will never come back. If that is the case, some investments may be permanently impaired, and tough decisions may be needed to cut your losses and run. Guard against getting stuck in the past and adapt as needed. 

ABANDONING YOUR INVESTMENT PRINCIPLES

It may seem a little contradictory but adapting to changing situations does not mean abandoning your investment principles. On the contrary, stick to your long-term plan. All of the savvy investors have said that they are focused on finding investments offered at an attractive discount. On the bright side, it is much easier to find discounted assets during a crisis than any other time. 

EXCESSIVE PESSIMISM

No one can deny that that things are extremely bad. The longer this pandemic continues, is the more harmful it is to our finances, our mental health, our sanity, our physical health and our quality of life. It is a good time to check in and, on your friends, who may not be managing as well as you are, and filling your mental space with as much positivity as you can. However, the old adage says, “nothing lasts forever” and “this too shall pass”. Let us be on our guard against excessive pessimism. Hopefully, we will be very interesting grandparents who will tell fascinating stories about this period — no doubt spiced up with a little poetic licence for interest! 

SPECIFIC INVESTMENT TIPS

Traditional crisis investing advice is to focus on low-risk investments, to invest in high dividend paying stocks, to focus on income — as growth stalls, and to perform enhanced due diligence. It just means that you should be extra careful when assessing investment options. In addition, remember that despite the downturn in the economy, there will still be companies who are thriving despite and sometimes because of the crisis. If you can, seek them out and invest in these. Focus on companies with stable earnings and in sectors that are recession proof.

Happy Investing! 

Yanique Leiba-Ebanks is the AVP, Pensions & Portfolio Investments at Sterling Asset Management. Sterling provides financial advice and instruments in U.S. dollars and other hard currencies to the corporate, individual, and institutional investor. Visit our website at www.sterling.com.jm Feedback: If you wish to have Sterling address your investment questions in upcoming articles, e-mail us at: info@sterlingasset.net.jm