In general, it's foolish (small f meaning bad idea, not Capital F as in The Motley Fool) to time the market. You can easily get it wrong and if you have a long-term investing timeline than small differences in purchase price don't matter.
Buying during a market crash, however, isn't timing the market, it's a smart idea. We don't know where the bottom lies and it remains unclear just how big an impact coronavirus will have on the stock market. But, with the market down from its highs by over 20% as I write this it makes sense to buy stocks due to the collapse caused by coronavirus.
What should you buy?
Did you believe in the fundamentals of a company before the current crash? That's a good place to start. Take a new look at any companies you currently hold or were considering buying and ask the following questions:
- Does the company have the cash to withstand a prolonged downturn in business?
- Is there something about the current coronavirus-related economy that fundamentally changes the future for this brand?
Basically, if any company lacks the cash/borrowing capacity to get through a few bad, even terrible quarters, then that might be a stock to avoid anyways. The second part is a little trickier but it probably won't impact too many companies.
An example of long-term changed behavior would be if you believe people may avoid going to arenas or theme parks for years instead of just months. I don't believe that, but if you do, you might change how you think about companies operating in those spaces.
Steady as she goes
When the stock market drops by 20% it's hard to not want to check your portfolio or to try to chase winners. There are definitely some stocks that will benefit from the coronavirus pandemic. These were good brands before the spread of the virus began that are getting adding attention due to the current problems.
One possible winner might be Teladoc Health (NYSE:TDOC), a company that offers medical visits with a doctor through your computer. It's a convenient service that I have used a handful of times because it's dramatically more convenient and much faster than going to a walk-in clinic.
Coronavirus may push people to Teladoc and other services like it. This will speed up adoption for the brand but it's important to note that this growth may accelerate but I believe it would have occurred eventually by word of mouth as more people get exposed to the concept of online delivery of certain medical practices.
Don't look for companies that are strong during the pandemic. Look for brands that have enduring strength that will either weather the storm and recover, or in cases like Teladoc, might jump-start their growth due to the unique circumstances.
This is a time to remember that investing is a long game. Use the market correction to buy more shares of great companies. Don't panic and stay the course. We've been here before, will be here again, and, eventually, the market recovers then gets bigger.