Investing during Uncertain and Anxious Times

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There has been phenomenal volatility in most markets which has not been seen previously, for instance, VIX for Indian stocks at 70 is rare and given the uncertainty prevailing in the environment it is unlikely that  VIX will get closer to its long term trend in the near future. The Drawdown from Peak to Trough has been very high in a very short span of time, especially for investors having high equity exposures. Equities are no exception as most asset classes (including Oil), have seen similar volatility and drawdowns.

There is no clarity on when the current COVID-19 Pandemic will end. In the absence of clarity on the severity of impact and period of duration, anxiety levels are only going to increase. In such a scenario, we need to figure out ways to keep calm as any additional stress or anxiety is not good for our health.

Leaders of most economies around the world are trying their best to minimize the adverse impact on society and no one knows when the economy will start to normalize. Some estimates suggest the likely impact on Global GDP would approximately be close to USD 12 Trillion. Besides, the time to restart the economic engine could take a few months and normalization is at least six to nine months away. 

In view of the above, my suggestion is that we should take Investment Decisions that are in line with our “Risk Appetite” and do not result in an increase in our “Stress Levels”. Health is our priority and it should take precedence over returns as we will get enough opportunities in the future to not only to protect but increase returns.  

In conclusion, here are my thoughts on both Philosophical and Tactical levels

Philosophical level 
We should focus on Safety, Liquidity & Returns in that order during these times of uncertainty.

Tactical level:


  • We need to be thick-skinned and not worry about drawdown as the bottom may not have been reached.
  • The investment tenure could be closer to 5 years.


  • Invest in AAA Companies and Government-backed securities  
  • Avoid long duration and credit products 
  • Immediate liquidity requirement should preferably be in liquid or arbitrage funds

Commercial Real Estate:

  • There is an expectation that opportunities will be presented in 9-12 months after stabilization of the current situation 
  • Big-ticket stressed opportunities may be available

Unable to comment on Gold as an asset class.

While Diversification to other asset classes/geographies is a great idea but better to stick with assets/geographies which we can relate to and have comfort while evaluating investments.

We should “Stay Calm, Stay Safe, Stay healthy and Meditate” during these times.

April 2020