Investing When Markets Stumble Pays Off

Published on 15th April 2020

The current pandemic has struck with unprecedented scale, impacting businesses across the globe as well as creating market panic in every region in the world.  But while the outbreak has been a disaster for the global economy, bear markets and recessions are nothing new and that there are bright spots to be found even in sectors facing a sharp slowdown.

The extraordinarily challenging crisis happening across the globe has obviously brought tangible economic consequences, even causing the biggest worldwide stock market losses in decades.  Although markets have entered a period of extreme volatility, we think that now is exactly the right time to think about investing.  This year’s biggest stock market crash is an opportune time to start building position in good quality blue chip stocks with strong fundamentals

While the exact impact of the pandemic is still unknown, history can tell us that more robust gains could play over the long term.  His comments came as he shared his assessment on the future outlook of the markets. 

The small rallies that followed peak-to-through declines in multiple broad market indexes looks to be short-term, so we think we are nowhere near normal from economy’s and market’s perspective. 

A number of factors still linger – including the continued rise in infected cases and worsening economic pains stemming from lockdown and job losses – the market remains in an uncomfortable structure.  Kumar underscored that this is the time to be greedy about valuations.  A whole host of bargain-priced stocks are available.  The aim is to buy now and hold for the long term. 

The markets will bottom out in eight months and that a strong recovery is in the offing.  My mid-term indicators for economic turn-around include government stimulus efforts that help induce liquidity in the market, easing economic jitters as the spread of infections is gradually contained, among others, which collectively augur well for excellent buying opportunities. 

My long-term outlook reveals huge upside potential with multiple times returns for new investors. I believe this crash offers new investors with huge buying opportunities to invest in blue chip stocks and assets at much cheaper levels.  The bright side to this pandemic is that investors can expect exceptional returns comparable to post-2008 recession recovery levels.  Historically, it will be reasonable to expect that the market will recover well, even possibly exceeding its previous high-water mark.

By Saikat Kumar

Founder and CEO of SKYCAP Investment Management Ltd.


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