‘COVID-Investor’: Looking beyond the norm of investing in Namibia
By Arney Tjaronda
Financial Analyst at High Economic Intelligence.
The procedure an investor follows when considering profitable investment instruments is through the traditional methodologies of collecting data through research, measuring risk and reward ratios, and the possible returns one might yield from those investments. It is obvious that you have to carry out either fundamental or technical research analysis, or even both, to see whether the investment instrument is suitable for your profit-seeking crusade.
The world of investment was governed by a few factors such as behavioural finance which can also be: greed, fear, and euphoria. While the other factors such as market analysis, game theory and the way how the media portrays a certain investment instrument.
Currently, things have changed beyond the norm, this is all because of the Covid-19 pandemic. For those who are unfamiliar with the terminology of behavioural finance. It is best defined by Stanford Graduate School of Business poised that “Behavioural Finance is the study of investors’ psychology while making investment decisions”. I reckon you already read my previous work on that subject so we proceed with how the psychology of investors was affected by the pandemic.
A research study conducted by a University in China- where the virus started spreading like wildfire- disclosed that the pandemic created anxiety which caused a lot of panic attacks, disrupting investor sentiments. Looking at the Volatility Index published in the 2021 Financial Stability Report by the Bank of Namibia displayed the volatility of the fixed income and equity markets.
Investor sentiments were mostly governed by one of the most influential sources of information and that is the media houses. Reporting from mainstream media had an impact on how investors made their decisions. Interesting topics like the announcements of the Covid-19 vaccine roll-outs gave investors a sense of ease and comfort because such information showed that even though things were bad, they are slowly recovering. Whilst news about business closures caused by the pandemic erupted fear in investors with thoughts pertaining to how the equity market will respond. Such fear caused many to dump their holdings to hedge the risk of losing a lot of money from their investments.
Being an investor in the “Covid-Economy”- a popular term coined by the reputable Economist, Salomo Hei- also means that you need to be a ‘Covid-Investor’ because believe it or not, this is the new world we are living in. Covid-19 disrupted our way of life beginning with people losing their jobs, the impact of inflation on the households, the way how we socialize with one another, and the disruption in businesses’ traditional methodologies.
The modern investor’s perspective has to change from looking at basic key performance indicators such as dividend pay-outs, stock market performance, and ordinary valuation models towards socio-economic factors like; climate change, developments of the pandemic because that is the innovative way of investing.
For as long we still hear ‘Covid-19’ at our dining table, 7 pm at home apart from the History books in schools, investors in Namibia should strive to be ‘Covid-Investors’. This not only benefits the performance of your portfolios but will assist you to develop the skill of being profitable as we surf through the pandemic.
The pandemic has pitched a tent in our backyards, so adopt and help yourself towards becoming a victor for as long as it’s here. Namibian investors can only pave the route towards profitability in their investment portfolios when they cautiously study the environment around us rather than candlesticks on Bloomberg Terminal.
The way how the financial markets works changed from what we were taught in school towards the future dynamics we are yet to discover. Lastly, the journey of an investor is like that of a surfer, riding through waves, being ahead of the curves before the waves die out. A thrilling adventure worth experiencing.