Update: COVID-19 Impact on Stocks
A lot has been written about COVID-19, and I certainly do not have the skills to contribute anything extraordinary in this regard. That being said, since this virus has had a tremendous impact on most stocks worldwide, it might be a good idea to reassess the drivers of the companies presented on this blog earlier this year. As an investor, there are two fundamental rules or questions that have to be answered accordingly at any time a stock of a company is hold: a) Does a new situation, either temporarily (such as a virus) or permanent (such as a crucial adjustment in law/regulation), change the company’s business model? b) Is the company valued attractively at the moment? This not only includes certain ratios or multiples, but also takes into consideration that the company will survive even in difficult times. The idea behind question a) is mainly to figure out if the firm will be able to deliver at least its historical earnings again in the future. For instance, many ...