My Coronavirus Strategy: Part 3 – Invest

This is part three of a mini-series on my business and personal finance strategies to survive and thrive the Covid-19 coronavirus outbreak and related financial crisis.

• Part One: Reduce Risk – in my businesses, investments and personal life.
• Part Two: Increase Earning – to gather cash for protection and to invest.
• Part Three (this one): Invest In New Opportunities – as the extraordinary times lead to extraordinary deals.

Now Is A Good Time To Be Investing – Everything is Cheap

To reuse an overused quote:

Be greedy when others are fearful

Warren Buffett – greatest investor of all time

Well, it has been a long time since people were as fearful as they are now. And that means they are selling cheap.

If you are holding cash now is a very good time to spend it.

Traditional Currencies Are Being Devalued

I said in part one that I am holding about a years supply of expenses for my family in cash. I still think that is wise and gives me a big safety net.

But anything above that I am spending. Not only are there great deals available, but I think our currencies are going to lose value. That means that £10 now will be able to buy more than £10 in the future.

The governments around the world are showing that they are willing to spend whatever it takes to combat the virus and try and hold off a recession. Even if they can’t afford it.

Well when you are the government and control the currency, the easiest way to get out of debt you can’t afford is to just print more money. That means inflation.

On top of that, we are currently seeing a flight to what are considered safe currencies such as the USD and to a lesser extent EUR. During the 2008 financial crisis, we saw £ drop from being worth $2 to about $1.5. Never to reach those old heights again.

This time around the £ is dropping again.

I may be wrong (and there is a good chance I am). But my philosophy is to ‘be ready for anything‘. And all of the investments ideas in this post I think are good ideas regardless of what happens to the £.

My Ideas For Where To Find Good Investments

Note – I am not a financial advisor. These ideas were created by me for me. Follow only at your own peril! This was written 26 March, things are moving so quickly my plans will change in the coming weeks.

Stock Market

The stock market crashed and is now having a fit and gyrating all over the place. I have no idea what it is going to do in the next year.

But that doesn’t matter because I am not investing with a year horizon but much longer. I plan to hold for another 20+ years and I reckon the market will have recover by then. So by buying now I am getting a bargain on if I had bought just last month.

I am a long time advocate of passive investing and just slowly buying index trackers. That means it doesn’t matter what happens to individual companies as long as globally we improve.

That being said I do think there are some individual stocks that are a good investment. I am not buying them now, but I might do later.

• Amazon. The crisis is massively boosting their business and I reckon they’ll come out stronger than ever.
• Microsoft has dropped. I think they are well placed to take the lead on working from home software. Which obviously is a good bet.
• Apple has dropped. I reckon people will be keep spending.
• Big online stocks like Facebook and Alphabet (owner of Google) are down. Usership should be increased even if ad revenue isn’t. But that will recover.
• Berkshire Hathaway is the business owned by Warren Buffett (from the quote above). He is holding $125+ billion in cash (or equivalent) and I can’t think of anyone better to know how to invest it.

To reiterate I don’t know what will happen in the short term. But in the long-term I think there is good value out there.

What I am doing – I have set up automatic investments to buy a passive global tracker fund. I may look into individual stocks later.

High Street Businesses

There are a lot of high street businesses that I think are very good companies. But have hit a huge disaster. That means they will be looking for cash to help them up.

They could get debt. Or they could try and get in partners.

There will also be businesses having to sell completely. I reckon there will be good deals out there, but after owning my own coffee shop I want to stay away from that stress!

What I am doing – I am keeping an eye on p2p equity raising sites like Crowdcube. I am also letting it known that I am interested in a silent partnership with some good businesses.

Stranded Inventory

Amazon’s fulfilment, Amazon FBA where a lot of small brands get most of their sales, are not taking in new stock at this time. Which is a problem as a lot of sellers are used to sending stock straight from their factories to Amazon. Now they have nothing to do with that stock. Either hold it or sell in bulk.

Well, it just so happens I have a small warehouse with empty space. I reckon there is money to be made buying people’s excess stock, holding it, then sending to Amazon once this is over.

And it is not just Amazon with stranded inventory. What about all the bars and alcohol distributors holding loads of stock on their books with suddenly no buyers and debt that needs to be paid?

What I am doing – this is the kernel of an idea. I am not sure how’d I find such sellers and how I’d qualify if the deal is good. Watch this space.

Bitcoin

Bitcoin, is it an investment or just a gamble? Probably the latter. I don’t include the value I have in cryptocurrency on my Assets spreadsheet because I think I could lose it all.

But. If these huge stimulus packages lead to large inflation that could be the push for finally some adoption of crypto into daily life. So I think it is worth a punt now.

What I am doing – In my August monthly report I said I was buying some bitcoin. Well, now I am buying some more. Yeah, shoot me.

Off-Plan Property

No one can leave their homes so people aren’t. And a lot of housebuilders rely on off-plan sales (selling an apartment before it is finished) so they can pay to finish building.

No sales mean building work grinds to a halt. So maybe they’d be willing to give me a good deal to ensure that doesn’t happen?

What I’m doing – have emailed round some housebuilders to see if they want to offload any stock. I and am trying to get a 40% discount. We shall see if I get any takers (none yet)!

Empty Properties

The property market has frozen and the short term letting market (AirBnbs?) has disappeared. So there are a lot of empty properties with large mortgages and no income. Maybe they’ll want to sell?

We are currently renting an apartment in central London for £85 a night on Airbnb. A huge discount down from £600/£700 a night during normal times. And probably less than their running costs. How many other places are in similar situations?

What I am doing – I am emailing estate agents saying I am interested in buying at a big discount with just a virtual tour. Let’s see what turns up!

Renovation Work

There are a lot of self-employed or small businesses that specialise in renovations and suddenly have zero business.

Well if you are thinking about doing some on your home, how about getting in touch now and working out a deal?

You’ll be doing them a favour by providing cash now (or future business they can borrow off) and they’ll be helping you out with a decent deal.

What I am doing – the only property I currently own is this one. And it doesn’t need any work. So I am doing nothing.

Freelancers or Outsourced Work

Freelancers and outsourced companies are panicking, and rightly so. A lot of their customers have stopped spending. Why get a new logo for your coffee shop if you might need to close down in the next few months.

If you have any work you want doing but have been holding off, then now is a good time.

What I am doing – I am going to be contacting PR and marketing agencies. I reckon marketing is one of the first cost-cutting areas, so now could be a good time to be a buyer.

People

You can’t buy people. But you can hire them. And a lot of great people are suddenly losing their jobs through no fault of their own. If you want to hire now is a good time. You will have a much better selection than normal.

Also if you are looking for interns now is a good time. In the early 2010s I was launching a few startups and had a no stop stream of interns. It was amazing, why would all these highly qualified graduates from the top universities want to work for me?

But it is a weird truth that working as an intern for a 22-year-old plonker like me on a tiny startup actually had quite a lot of value on their CV. Especially when no one was hiring.

What I am doing – not much. As it stands I don’t need anyone. But job insecurity will probably last a long time so I might be able to take advantage in a year or two.

Commercial Leases

In 2011, while the city of London was still reeling for the financial crisis, I went hunting for office space. And was amazed how good the deals available were.

I got a fully-serviced office in Broadgate tower, a skyscraper in central London for cheaper than my rent in a smaller flat in East London. All because the City was full of empty office space they were desperate to fill.

Well, the same is now true for commercial landlords everywhere. Want to get a lease on a shop front? Now is a great time. Want to renegotiate your current office lease? Do it! Thinking of signing up to WeWork? Drive a hard bargain.

What I am Doing – We are going to look at renegotiating our warehouse space.

I Can’t Do Everything

Ok you are probably thinking I have gone mad. But I am throwing my net wide to see what deals I am offered. Then I will asses what is best what I should be spending my money on.

Also, I’m open to ideas. Have you spotted any good deals? Let’s chat in the comments.

There is a companion episode to The Lazy Entrepreneur Podcast to this post. 60: Survive & Thrive During The Virus | Part 3 – Invest!