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In 2019, no one would’ve expected the challenges society has had to deal with in 2020 due to the COVID-19 crisis. Regardless, it’s still important to keep a clear head and follow a few rules to help make smart decisions when you’re investing in a volatile market and shaky economy.
Here are the rules
Sticking to Your Process and Evaluating the Future
If you’re fundamentally focused as an investor and make your investment decisions based on earnings and the future outlook of a company, it’s essential to continue this type of strategy when you’re evaluating your investment choices. Companies paying dividends may have a difficult time continuing this process if their sales drop dramatically due to everyone being on lockdown and not making the usual purchases. The projections for profits are likely to change to the downside for several businesses. These projections may lead to a reduction in the amount of dividends paid. Analyzing the business model of a company should help show the potential challenges with cash flow and operations.
How Strong Is a Company’s Balance Sheet and Cash Flow?
After the economic problems associated with the coronavirus crisis begin to settle, some companies will bounce back and others may fail. Selecting stocks associated with companies already possessing a strong balance sheet and cash flow going into an economic downturn should help make it easier to find financially stable companies. Staying aware of specific sectors getting hit the hardest should help you avoid getting caught with a bad investment. Financials and the energy sector are a couple of areas where a few companies have already announced a cut in dividends.
Broadening Your Investment Choices
If you are used to investing in specific sectors, such as oil, it’s probably time to broaden your universe and stay away from large-cap stocks being affected by a large portion of society. Analyzing smaller companies, sectors or niches can help you avoid losing money in stocks that are affected by macroeconomic conditions. Researching the best penny cryptocurrency to invest in 2020 or buying the shares of a company in another niche market where sharp economic terms don’t play such a significant role in the overall outcome of a business may be advisable. According to the experts at Money Morning on cryptocurrency, crypto prices recorded a rise last year in the spring as Bitcoin surged, however, they again ended up at the same place from where they started. What this means is that cryptocurrency is trading at bargain prices as of now. In other words, prices of penny cryptocurrency are a bargain and there a few out there that may have some potential
Imagining a Post-Crisis Economy
During a crisis, it can sometimes be challenging not to get caught up in all of the adverse conditions and see any positivity regarding the future. While some businesses won’t survive a crisis, other areas may thrive. As an investor, it’s essential to think out-of-the-box and open your eyes to different business models where new trends may be embraced.
Discovering New Trends
Communicating virtually has been one of the ways several individuals have talked with each other during the coronavirus crisis. The area of education may be changed as well as business travel, which might provide new opportunities. The area of cryptocurrency may be another winner as several banks closed their branches, which has led to more individuals going online to handle their financial transactions. An offshoot of this change may be to look for the best penny cryptocurrency to invest in 2020 as more people look for alternatives.
The coronavirus event has been shocking to the economy and society. Navigating through this period by evaluating short-term challenges or long-term opportunities can help you choose the best areas to invest your money.