How Coronavirus (COVID-19) affects my portfolio (Part 1)

In this post, I will briefly describe how COVID-19 (also known as Coronavirus) affects my portfolio and how I plan to take advantage of the stock market correction that it causes. Previously, during the December 2018 correction, I already used this strategy and it worked quite well. You can read more about it here: “Invest During Market Downturn”.

Coronavirus (COVID-19), as it spreads, affects businesses and economics of many countries. Especially, the countries that depend on China to produce their goods, because many factories in China are getting closed due to the risk of spreading Coronavirus (COVID-19) by factory workers.
For example, BMW got hit really hard as at least one of their factories in China had to be closed. I noticed and felt it because BMW has the biggest share in my portfolio. It dropped more than 20% in the last couple of months. I don’t plan to add more BMW shares as it’s too risky to have such a big part of portfolio invested in one stock. You can read more about my BMW position here: Stock Market Investing Mistakes (Part 1).

As of today, March 1st, 2020, major US/European indices lost around 15%. I started adding to DAX and Nasdaq100 as soon as they dropped 10%. More details about these transactions below:

I also have invested €1 500 into Estonian companies and additionally €300 into world index MSCI ACWI through my pension fund. So, overall, I have already injected €6 310.

So far, I only used funds available on my bank accounts. However, I have started to withdraw uninvested money from P2P platforms. Moreover, I also started to sell loans and withdraw money from P2P platforms that have a secondary market. I have to admit that secondary markets on Mintos, Twino, and Swaper work like a charm. The funds yielding 8% interest with daily compounding on Nexo are also extremely liquid and available for instant withdrawal. In total, I have withdrawn €10 153.

Platform Amount Time to sell
Mintos€2 2531-2 hours
Twino€1 4401-5 minutes
Swaper€4 4541-5 minutes
Nexo€2 006instant

I don’t know how hard Coronavirus (COVID-19) will affect businesses in reality, but I expect the market to go south next week even further due to the panic. In case it happens I’m prepared to inject more funds. My plan is to start adding more if the market hits -20% mark (-20% from S&P 500 all-time high).

I would like to add more to my “Lyxor Robotics & AI UCITS ETF (ROAI)” position, which already dropped 16%. I also plan to buy “iShares Core S&P 500 UCITS ETF (SXR8)” tracking S&P 500 index and “iShares Euro Dividend UCITS ETF EUR (IDVY)” tracking European dividend stocks.
I’m also thinking about buying shares of some individual US and Estonian stocks.

Please note, that buying shares of individual stocks can be very risky as you can end up catching a falling knife. That is, the risk of an individual company to go bankrupt or never recover after a crisis is much higher than the risk of an exchange-traded fund (ETF), consisted of multiple companies, to go to 0.

Depending on how the situation with Coronavirus (COVID-19) evolves and affects the markets, I may deplete my Mintos, Twino and Swaper accounts completely just to take advantage of the stock market correction. I may even consider to start selling my EstateGuru loans paying 2% transaction fees to EstateGuru. Of course, this is just a temporary measure to fully take advantage of the stock market correction. I don’t plan to exit these platforms forever. Moreover, I plan to replenish my accounts on these platforms as soon as possible, as it proves to be a very liquid money buffer yielding 10-15% that can be easily used in such situations.

Stay healthy, keep calm and don’t forget to take advantage of stock market corrections! 😉

6 thoughts on “How Coronavirus (COVID-19) affects my portfolio (Part 1)

  • you are using all of your reserves already? you could have just invested more in December to get the same result!?!

    • Hi Steve! As I mentioned in the post, I only invested a fraction of my reserves and I plan to invest more if the market drops further. As a preparation for this, I started to withdraw money from some of my P2P platform accounts, namely Mintos, Twino, Swaper, Nexo.

  • Thanks for your thoughts ; always interesting reading.

    I agree that the crash hasn’t finished. Certainly, many “good-time investors”, after this weekend of thinking (or should I say panicking) will sell-off their holdings. so, we could see another sharp drop in the markets until at least Tuesday.

    At the beginning of the month, I had already switched some money to Gilts (British government bonds) and gold funds, just in case. But, not enough, in retrospect.

    For those of us who are “in it” for the long term, there certainly are opportunities here.

    When the market steadies a little bit, I will also invest more in Robotics (for me, L&G ROBO Global Robotics and Automation) and also in Cyber security, Clean energy, European property, Health care. I’m not sure what will make me decide yet that the markets have “steadied a bit” – I need to give it more thought, while taking into account my risk threshold.

    I try to use trackers (ETF) to keep the management costs low, as they have generally been performing as well if not better than managed funds.

    But, all that said … I’m just back from Rome, so who knows, maybe this discussion is purely academic for me 😉

    • Hi Colin! I hope you didn’t catch the virus as I would like to keep my readers and continue to get interesting comments. Sorry for the black humour and stay healthy! I hope you will be able to invest closer to the bottom and make some good money!

    • Thanks for your comment! Care to elaborate? Do you expect S&P 500, MSCI ACWI and other big indices to go to zero?

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