While the world is obsessed over the downsides of the Covid-19 virus, it’s good to also take a moment to think about what we, as humans, have achieved in just the last century alone.
Medical and technological breakthroughs, upgrades in the standard of living and infrastructure, as well as modern comforts never before imagined by our ancestors.
These are the “wonders” that we take for granted.
These all would not have been possible without human ingenuity and innovation.
The same lessons can also be applied to the world of investing. Over time, various companies may rise and fall, but those that become great are the ones that continue to evolve and adapt to challenges and adversities around them.
A lesson in resilience
Covid-19 has made us realize how interdependent we are in order for things to flow smoothly. The world has, indeed, become more of a global marketplace like never before.
As a result of travel curbs and factory closures, supply chains have been disrupted, while mall and restaurant owners suffer from greatly reduced business activity.
Many companies have scrambled to adjust to this new, if temporary, reality. DBS Group Holdings Ltd (SGX: D05), for example, asked its staff to work from home after it was revealed that one of its staff at the Marina Bay Financial Centre branch was infected with Covid-19.
Other firms, such as Valuetronics Holdings Limited (SGX: BN2), are shifting more production to locations such as Vietnam, in order to cover the shortfall. Although the fall in production volume cannot be sufficiently replaced, it does show that efforts made by companies to mitigate business interruption have seen some success.
These examples show us how resilient and adaptable companies and businesses are, even in the face of stiff challenges, and such actions should be applauded.
The power of human ingenuity
As investors, we should continue to have faith in businesses that are able to ride out tough times.
Time has shown us that the power of human ingenuity has enabled us to level up our standard and quality of living.
Covid-19 may cause us significant hardship and problems, but over time, these issues are not insurmountable.
Resourceful management teams will figure out a way to continue doing business even amid the disruptions and interruptions.
So, we should continue to deploy our capital into great companies that are run by competent and experienced management. Interestingly, it is only when adversity hits that we can sieve out the great companies from the mediocre.
Adaptability and evolution
Great companies can continually adapt to different situations and yet remain relevant.
This trait involves the evolution of ideas, products and services and is an essential process for any organization to survive over time.
Think of Darwin’s Theory of Evolution — only the organisms with the strongest traits will survive to bear offspring and pass these characteristics on to the next generation.
Companies should be viewed the same way — invest in only the best companies with desirable traits that can be passed on to the next generation of leaders. These companies are the ones that can survive through hardship and economic storms and emerge relatively unscathed.
Get Smart: The importance of soldiering on
Here at the Smart Investor, we believe in the importance of long-term investing through all kinds of situations.
Whether it be a virus outbreak or a punishing bear market, our job as investors is to deploy capital in a sensible, consistent manner into great, well-run companies.
Believing in the strength of the human spirit is key, as it allows us to have faith that companies can and will get through adversity and that strong companies can continue to grow stronger.
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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.
