After Covid-19 : Will the World be the Same?

Over the last few weeks we have been living in a world that almost resembles the Walking Dead Series. The only thing currently missing is Zombies roaming the streets. The Covid-19 virus has changed everything. Thing we always took for granted seems like ages ago. Most of the countries in the world including here in South Africa are on a partial or complete lockdown and we truly cannot say if and when we will be able to go back to our normal lives. Its been incredible to see how counties like the USA and China are struggling to stay afloat even though they are the most advanced and financial strongest countries in the world today.

Only time will tell how Africa will handle this coming tragedy. As I am writing this, the outbreak has only started in most African countries and we can only pray that somehow the lockdowns put in place by various governments, like South Africa, Eswatini and many more will be enough to save the people from this great continent.

What has however taken the most strain in the last few weeks, has been the worlds financial markets. It seems like the so-called experts have run through their 2008 financial crises handling textbooks and are now trying anything including the printing of money at a ridiculous rate in order to try and stimulate their economies and to get the cash flowing again. To date this has not worked and is very unlikely to actually work. Businesses, especially small businesses has been the most severely hit by this crises as they had to close down in most cases due to the compulsory lockdowns in various countries. The knock-on effect of this is that owners will not be able to pay their workers, or pay rent, which in turn will start effecting more and more employees as businesses start to liquidate under the financial strain of the Covid-19 outbreak. Governments all over the world are trying to put measures in place to save these businesses, but again, only time will tell if these measures helped.

With the free falling financial markets, the biggest problem that potential investors are struggling with is that their current investments, including provident funds are also in a free-fall. There has been absolutely no sense in the way that the markets have fallen in most cases, and it clearly shows that investors like Warren Buffett is correct when they oppose the general view that markets are efficient. In South Africa, we have been seeing massive panic buying of food and other goods, which gives massive boosts to the revenues of these stores, but it cannot really been seen in their stock prices. What is however clearly seen is the drop in all stock prices of companies, whatever sector they find themselves in. Most of these are very strong companies with great financials, but their prices are dropping with all the others, without any financial reason whatsoever.

As stated above, governments, especially the USA are printing money as fast as they can and are literally adding Trillions of Dollars to the market. It seems like the US government is only looking at tomorrow and not what all these printed dollars will do to their economy in the next 5 to 10 years. It seems like they do not realize that the more dollars they print daily, the less its value is becoming. With the dollar not tied to the value of gold for the last few decades, it is becoming more and more of a Fiat currency and worth less and less. If investors are therefore selling gold to buy dollars, they are taking massive risks as their dollars today are worth much more than their dollars tomorrow.

Investors, especially private investors, are becoming more concerned of what they must do next with their investments. This while their investments are shrinking away in front of them during these volatile times. Do they sell, or do they hold and hope the prices recover after the virus. These are the types of questions we are all asking at the moment, as there is currently no end in sight to the devastation that the Covid-19 virus is causing.

Firstly, I think everyone will agree that you must not make emotional decisions at a time like this. It should be remembered that this is merely a massive down cycle we find ourselves in and that markets go up and markets go down. In this case the market will recover even though no one can say how far it will recover. The bet however is that if you invested in the correct companies whose financials and business is strong, the last thing you must do now is too sell your stock. Once you sell, you tie in your losses. The best in my view, although I am not a financial advisor is to ride out this down cycle. A strong company will not only survive this down cycle but probably come back much stronger in the future.

The best advise however must always come from people who put their money where their mouth is. We have so many fund managers and brokers, that do not follow their own advise, but now wants to tell others how to survive in this crazy market we find ourselves in. I would rather suggest we follow the advice of people like Mike Maloney, who has proven over and over that 'Real' money like gold and silver will always come up trumps after a crises like we are living through today. Due to the massive printing of paper money, people will start losing faith in their currencies, especially the dollar and go back to the only money that truly holds its value, and that is gold and silver. Gold is at historically high prices but the reality of it is that you cannot print more gold. There is a limited supply of gold and silver in the world and at the moment it is well documented that there is a massive shortage in the supply due to the massive demand that currently exists for these commodities. It can therefore be expected that the gold and silver prices should skyrocket over the next few months and it can never be bad advice to get investors to buy as much gold and silver in these times.

In the end however it is critical to make sure that you do not listen to 'Fake' experts, as Robert Kiyosaki calls them and ensure that you get advice from the correct people. It is therefore always a good question to ask you financial advisor what his nett worth (Asset less Liabilities) is. You will be amazed at how many brokers as just that, Broke, but they still reckon that they can give other people advice on their investments. Rather ensure that your advisor him or herself have a good nett worth as this should give them some credibility when handling your investments

• Written by Tommy Strydom.
• It should be noted that Tommy Strydom is not a financial advisor and the writings above purely reflects his own ideas regarding the investment atmosphere we face today. Please ensure that you do your own proper analysis of any investment product before investing in it.