I am sure you have come across this qoute from Warren Buffett. Those who follow Warren will agree with me that, the business tycoon offers worth noting investment insights especially when one finds themselves in the midst of a tide.
Millions of employees have lost their jobs, many businesses have closed and many cannot pay their rent. These are some of the effects of not only Covid-19 but of all manner of disruptions, including geopolitical uncertainties, cyberattacks, natural disasters and more.
Warren Buffett
While his net worth stands at US$71.8 billion as of July 2020, Mr. Buffett turns 90 on August 30 - a walking library of philanthropy and business development.
Well, his qoutes are unique but the one mentioned in the introduction above is the latest to catch my attention. For Warren, when the business conditions are favorable and when markets are performing well, many players look good.
He was referring to the stock market, where if a bull market causes stocks to get bid up to unreasonable levels, and people buy them irrespective of valuation just to look good in the short or intermediate term.
In business however, flawrd businesses models and practices show temporary decent profit margins. On the other hand, when business conditions worsen and the stock market corrects, it is much easier to see who truly has a good business model and in the case of the stock market, who is really underwining the investments well versus who is just getting lucky during the 'boom times'.
Too bad coronavirus is not a 'boom time', the pandemic is significantly impacting businesses and the economy. Investors are working round the clock to address the much needed changes and preparing for the next-normal.
Companies have begun to reasses assumptions like never before. Business is uncertain and circumstances are changing time and again. The ability to sense and respond require constant evaluations.
While business leaders are focusing on managing risk and maximizing returns at the same time, observing government policies, private enterprise and family businesses are likely to respond and adjust more quickly than others given their agility and ingenuity.
Many well-known brands are bankrupt, as consumers stay at home and economies shut down. The travel industry is deeply affected; 80% of hotel rooms are empty. Airlines cut their workforce by 90% and tourism destinations are likely to see no profits in 2020.
"Turning massive challenges into meaningful change"
Apart from travelling and tourism, sporting events such as the Olympics have been affected. Conferences and expos have been called off. Cultural establishments including gallerings and museums have been abruptly affected as well.
While some business are struggling, some businesses are thriving - turning massive challenges into meaningful change.
This is true for a number of internet-based businesses. Those related to online entertainment, online shopping, online education, food delivery and solutions for remote work.
People have also changed their consumption patterns. The demand for takeout, snacks and alcohol has increased as well as cleaning products as we spend more time at home. Industries providing healthcare and medication are also doing well during this time.
Covid-19 outbreak is part of the long list of global catastrophes that have occurred in the past and are likely to occur in the future. Dangerous viruses will emerge after Covid-19 and it is up to you and I to prepare and be ready to dampen the effects. 'The discussion has not focused on whether there will be an outbreak, but when new outbreaks will happen.' As the global population increases, and the human-wildlife interaction grows, it is likely that the transfer of new viruses to the human population will occur.
However, successfully navigating these challenges does not guarantee a promising future. Once we get through this pandemic, we will emerge in a totally different world compared to the one before the outbreak.
"The journey to recovery and reinvention continues..."
What's Next?
Authorities have implied that other humans from other countries are dangerous as they may carry the virus. A closed border implies that, the threat is from the outside. That being the case, International flights are likely not to be an option for many people in the coming years.
This means that, countries will become more nationalistic and less globalized. Such developments may have a negative effect on long-term protection measures against the consequences of an outbreak.
Global efforts, collective response and sharing of resources is required to strike out a pandemic outbreak in the world. Such cooperation is also key to tackle other global challenges that we may face in the future.
To me, the next-normal is going to be different in so many ways. Everything happening now has taught me not to take unnecessary risks especially when the time to 'swim in money' comes once again. I am now extra cautious when making major decisions knowing very well that I can be exposed when the tide recedes.
