It is the beginning of the third week of restriction of movement in Accra, Kasoa and Kumasi in response to the COVID-19 pandemic. When this “lockdown” period started on March 30, Ghana had recorded 152 cases. At this moment, the recorded cases are 566.

The global response to the virus was slow given what we now know about how devastating it can be and how rapidly it spreads. In fact, I’d like to detail the 3 stages of denial that we have gone through so far.

Stage 1: It’s an Asian virus. This was the stage at which most people and governments were when we first learnt about the outbreak in Wuhan, in China’s Hubei province. Even when Vietnam, South Korea and Japan got outbreaks it was easy to write it off as another version of the SARS outbreak that occurred between 2002-2004 and remained largely endemic to East Asia.

Stage 2: It’s a Flu. Once Iran and Italy started getting ravaged by COVID-19, the next stage was to see COVID-19 as a Flu with a low fatality rate which most people can easily kick without medical attention. Sports events, international travel, vacations, parties, religious gatherings and so forth continued unabated. The only thing that had significantly changed was the demand for hand sanitizers.

Stage 3: It will be over in a few months. This is the stage we currently are in. Most countries in the world have closed their borders and have restricted movement within their countries to try to reduce the spread of the virus. Many governments declared lock downs of between 2-4 weeks but they are very likely to extend them. Many people are optimistic that we will have life back to normal by the end of the second quarter of this year. But we have been proven wrong twice already. Would it be a third time lucky?

The importance of going through the denial stages is to put the current investment climate in the right perspective. We were wrong during Stage 1 and Stage 2. It would be folly to assume we are right this time. The uncertainty in the global economy is too much to expect that investing now is similar to investing in normal times.

If airlines, oil companies or sports franchises knew what was coming this year, how would they have behaved last year? If governments knew this was coming, what priority would they have given the health sector last year? If you knew last year that there was going to be a lock down that would force you to close your business, or get laid off, or force you to stock up on food, how would you have behaved differently from how you did?

This is the mentality that you need to have at this moment. You should invest as if Stage 3 is going to be proved wrong and we would not in fact have things back to normal in a few months. There’s an asymmetry between the risk and reward of investing in this stage of the pandemic. If you are right and things do get back to normal in a few months, you could make a handsome return. But if you are wrong, the negative impact could be of a larger magnitude than the reward would have been.

Now that I have laid out in detail the exact kind of investing environment we are in. I will get into specifics about what to invest in and how to invest.

Invest in your health. In my first post this year, I had written about the importance of investing in our health. Perhaps it has never been as important as it is now. Take care of your physical and mental health and that of your loved ones. The markets will always be there, they can wait. Do your best to make sure that you will be around to get back to them when the pandemic is over.

Invest in food, medicine and essentials. This is pretty self-explanatory. This is not the time to be thinking of massive returns (especially if you are not wealthy). In times of crisis food, medicine and other essential items become far more valuable than paper currency or digital records. Secure these.

Maintain a cash balance. Apart from my monthly contributions to mutual funds as well as my pension contributions, I am not making any financial investment at the moment. There is simply no case, given the possibility of a prolonged lock down, to be chasing returns. Those opportunities will still exist if things get back to normal as we all hope. In the meantime, it is better to have cash (this includes bank accounts) to be able to meet living expenses and possible healthcare costs.

Go conservative. For people who have been able to go through the first three priorities and still feel they have money to invest, you can invest in treasury bills, government bonds, banks’ fixed deposits and fixed income funds. This will give you some low risk returns with the added benefit of relative liquidity.

Take calculated risks. The Ghana Stock Exchange (GSE) has not been kind to investors for a decade (analysis here) and it is unlikely that this pandemic will improve their performance. But the beauty about investing in stocks is that it has made fools out of even the best forecasters. Nobody knows what is going to happen. So if you’re game for some calculated risk, you could invest in stocks through a balanced fund. This has a roughly equal allocation to stocks and bonds so you can invest in stocks while having the protection from the bonds.

Go crazy. This is only for the wealthy. Strictly for the wealthy. Periods of crisis have proven to be great buying opportunities for people with the wherewithal. Real estate, businesses and luxury items could all see their prices depressed as people shift their demand to essential products or as they sell off their assets to buy essential products. This presents a buying opportunity for people with the financial muscle to be able to purchase them and wait for several years to make a return. Of course it could also go horribly wrong and you will be left with a huge loss.

I wrote this post because I had been getting lots of questions about what to invest in at this period. And I also have a feeling people are not taking the pandemic seriously enough. I hope I have been able to answer most people’s questions.

Remember to stay home, wash your hands, use hand sanitisers and eat healthy. You may not care about your health or that of your loved ones but you could be putting others at risk by being reckless. If we work together, we could make it out of this pandemic with minimal losses and we will be back here on CediTalk analysing investments and working on improving our personal finances.

Please do read this site’s disclaimer. Photo credit: https://starrfm.com.gh/2020/04/covid-19-western-region-registers-first-case/. All the best!