Should You Trade Stock During the Pandemic?

Should You Trade Stock During the Pandemic

There is no right or wrong time to trade in the stock market. It is all dependent on your state or mind and how you handle your emotional side while trading stock. This means always checking on the external events in life that could have you making poor decisions while trading. Clearly, the COVID-19 pandemic is one of the things that puts a lot of stress on the minds and bodies of all people. So, is it worth trading during the pandemic?

The Do-Nothing Approach

This approach is not likely to appeal to the Wall Street junkie type, but there is something to be said for not taking direct action at this time. Perhaps sitting on the sidelines for a little while is not so bad after all. Those who decide that now is not the right time to invest are making a conscious effort to ignore their instinct to trade and instead give themselves a bit of a break.

Dan Ariely, the author of the well-known “Predictably Irrational” suggests that doing nothing is what most people will find the most profitable at a time like this. He argues that the human brain and psychology gets in the way of making profitable trades during a crisis like this. Many people go into a “fight or flight” mode and do not re-emerge from that mode until things have settled down externally. It is built into us evolutionarily, and it is difficult to overcome.

Purchasing COVID-19 Related Stocks

Some investors have taken the tact that they must find a way to profit from any given external event in the world. It is not the fault of investors that there is a global pandemic, but it is their responsibility to react to it in a way that responsibly builds up your portfolio. Those who subscribe to this belief have largely worked on building up a portfolio full of names that could benefit from the conditions that people are living under as a result of the spread of this disease.

Companies such as those that provide streaming video services have seen an uptick in the number of subscribers that they have. This is no accident. It is the result of the fact that many more people are stuck indoors these days, and that means they turn to movies for comfort. They want to subscribe to the streaming services that appeal to them, and those services have seen a steep increase in their subscriber bases. An investment in them early on in the pandemic has paid off handsomely.

Add Cash To Your Account

There is a middle road that some opt to take when considering how to invest during a pandemic. The middle road that a lot of them choose is to stack up cash in their portfolio rather than invest in specific assets right now. Building up cash means that they can take a stab at purchasing an asset when it goes on sale so to speak. That extra cash is incredibly valuable to them, and it makes for a good investment method. Buy low and sell high.

It is the worst to be completely without liquidity when assets go on sale as has happened with so many of them throughout this pandemic. The best thing to do is to fund the account piece-by-piece with regular infusions of cash and let it sit there. Allow it to stay in a money market account until something goes on sale so heavily that you can’t resist buying it.

There are a lot of tactics that one may decide to with during this disaster, but you have to decide for yourself what your psychology is and how you will handle your own emotions related to the pandemic. Adjust your tactics based on your own experiences and go from there. You can’t go wrong as long as you take the time to review and understand where you are personally.

All opinions expressed on USDR are those of the author and not necessarily those of US Daily Review.