[Summary]
The coronavirus shock was a phase in which the market plummeted due to the spread of the infectious disease and rebounded due to policy support.
The advantage of the coronavirus shock is that it does not guarantee profits, but that it makes it easier to organize the materials you need to look at.
In actual investment, the starting point is to understand industry differences and policy market rates at the time of shocks. However, it is important to be aware that temporary changes in demand can easily be mistaken for permanent trends.
In this article, we will organize the coronavirus shock not as "knowledge" but as steps to check before buying or selling. Don't rush to conclusions, read according to your financial amount and time horizon.
What to do first due to the corona shock
When looking at the coronavirus shock, first determine what you want to judge. The information you need will change depending on whether you want to know the meaning, confirm before buying or selling, or review your current holdings.
Especially for beginners in investing, the easier the words are, the more they tend to take them as a conclusion. The corona shock alone is not a factor in making decisions. If you want to check it, it is more realistic to look at it in conjunction with fund management, holding period, and opposing materials.
Don't be overconfident about the benefits of the coronavirus shock
If we look at the corona shock as an advantage, we must first make a narrow premise. It is important not to mix up whether you are talking about the market as a whole, individual stocks, NISA or long-term funds.
If you check the following points, things will be much more organized.
| Axis to check | What to see during the coronavirus shock |
|---|---|
| purpose | What do you use to judge? |
| Time axis | Which is closer to short-term trading, long-term holding, or NISA? |
| basis | Which one is more important: price, business performance, interest rates, exchange rates, or psychology? |
| risk | When things go the other way, where should you look again? |
| action | Will it lead to buying, selling, or doing nothing? |
Points that can easily cause trouble in making decisions
It's not just the lack of knowledge that causes us to stumble due to the coronavirus crisis. In fact, there are situations where we interpret something conveniently because we know a little bit about it.
- Decide first what will become visible due to the coronavirus shock
- Differentiate between conditions that bring about benefits and conditions that do not.
- When expectations are too high, test with a small amount
- Write down the terms of withdrawal before considering profits.
What is important here is not to settle on one correct answer based solely on the corona shock. In investment, the meaning of the same material changes depending on the market, holding period, and amount of funds. When in doubt, prioritize confirmation over conclusion.
Checklist before buying and selling
Before using the corona shock as a basis for making an actual decision, please check at least these five things.
- Can you explain in one sentence the purpose of watching the coronavirus shock?
- Have you confirmed one or more countermeasures or failure conditions?
- Are you investing your living funds or money that will be used soon?
- Have you decided in advance the criteria for cutting losses, taking profits, and continuing to hold stocks?
- Are you making judgments based only on social media or short headlines?
Checklists are simple, but they prevent you from adding reasons after making a decision. The purpose of confirming the coronavirus shock is not to act faster, but to reduce unnecessary errors in judgment.
Summary
The corona shock is a material for reorganizing investment decisions. Even if you read it as an advantage, treating it as a stand-alone buy/sell signal will make your judgment difficult.
The points to keep in mind are as follows.
- Decide the purpose of watching the corona shock first
- Do not mix time axis and amount of funds
- Check not only good materials but also negative materials
- When using NISA and long-term funds, consider how to handle losses
- When in doubt, reduce your position or postpone it.
The more knowledge you have, the safer it seems, but in the market it can become dangerous if you use it incorrectly. It is realistic to treat the coronavirus shock as a tool to pause before buying or selling, rather than as a word to rush into judgment.