As the famous line William Shakespeare’s Hamlet goes, “To be, or not to be, that is the question”.
Give that line a makeover, and it would read as “To invest, or not to invest?”
… which happens to be the dilemma clouding investors’ minds right now.
Should you put in money now, given that stock markets have recovered?
Or should you wait until the market comes down before investing?
Will you miss out on gains if you hold back?
The world has not fully recovered from the pandemic, but stock markets in the US are scaling new heights.
The situation presents a conundrum for investors.
An uneven recovery
The rapid development of several COVID-19 vaccines by Pfizer (NYSE: PFE), Moderna (NASDAQ: MRNA) and Johnson and Johnson (NYSE: JNJ) has helped humans push back against the coronavirus.
This optimism has been buoyed by success stories such as the recently-established travel bubble between Australia and New Zealand, which allows quarantine-free travel between the two countries.
And in Israel, with over half the population being successfully inoculated, life has resumed some semblance of normalcy with people not being required to wear masks outdoors.
Unfortunately, the same cannot be said elsewhere.
In Asia, India has been grappling with record-high COVID-19 infections and faces an acute hospital bed shortage.
Meanwhile, new COVID-19 variants are also emerging in Brazil, with the country being only second to the US in terms of COVID-19 deaths.
These disparate pieces of news show just how different the situation can be depending on which country you are referring to.
And amid the vaccination drive, there is a real risk of a vaccine-resistant variant escaping into a densely populated area and sparking off another deadly wave of infections.
These are admittedly worrying signs in our fight against the disease, but it should not hold us back from recognising the positive.
For instance, Mexican food chain Chipotle Mexican Grill (NYSE: CMG) has pivoted successfully from in-store dining to online ordering. In its latest quarter, more than half of its sales came from digital orders.
This example is inspiring as it demonstrates the tenacity of the businesses to survive and thrive despite adversity.
Riding the wave of optimism
Let’s also not forget that there’s a group of businesses that are seeing a strong surge in demand by virtue of them being in the right place at the right time.
The pandemic has resulted in a seismic shift from the physical world to the online one, boosting everything from cloud computing and e-commerce to electronic payments and signatures.
In 2020, social media giant Facebook (NASDAQ: FB) witnessed a 12% year on year jump in monthly average users as more people take to social media to stay in touch with friends and family.
Over the same period, online payments specialist Paypal (NASDAQ: PYPL) registered its best year ever as revenue climbed 22% year on year, with total payment volume topping US$936 billion, up 31% year on year.
Meanwhile, with more people starting home businesses, companies such as Shopify (NYSE: SHOP) are seeing a surge in users on their platform.
Revenue for the e-commerce company soared 86% year on year, with gross merchandise volume nearly doubling over the same period.
Elsewhere, software-as-a-service companies such as DocuSign (NASDAQ: DOCU) are also witnessing strong growth as businesses switch from paper signatures to e-signatures.
Back in Singapore, home-grown fintech company iFAST Corporation Limited (SGX: AIY) reported a surge in account openings as more people signed up for online brokerage services to invest their money.
The group reported a stellar set of first-quarter 2021 earnings, with net revenue up 51.4% year on year and net profit more than doubling.
I could go on, but I think you get the message by now.
A whole slew of companies have done well for themselves, thus opening up numerous opportunities for the savvy investor to catch a piece of the action.
Restructurings and demergers
Meanwhile, a host of blue-chip companies in Singapore have been busy restructuring their businesses to adjust to the new business environment.
Keppel Corporation Limited (SGX: BN4) announced a strategic review of its offshore and marine business as the blue-chip conglomerate is dealing with the headwinds in the oil and gas sector.
Sembcorp Industries (SGX: U96) pulled off a demerger and spun off its Marine division under Sembcorp Marine (SGX: S51) and is now a pure utility and urban development business.
And CapitaLand Limited (SGX: C31) recently announced splitting up its development and investment property divisions, choosing to privatise the former and list the latter in a new company called “CapitaLand Investment Management”.
These moves have undoubtedly been catalysed by the current circumstances but investors should recognise the benefits of these actions.
By reorganising their businesses, these well-known companies are helping to unlock value for their shareholders.
With a streamlined, asset-light business, it’s also easier to seek growth and be valued more accurately by the stock market.
This change for the future is an encouraging sign that some companies can successfully reinvent themselves.
The implications for investors are clear.
A once-poor investment may turn out to be a gem in the rough should management pull off a successful restructuring or strategic review.
Even as some companies may falter, others have found opportunities to rise up, reinventing themselves and continuing in a leaner form.
Get Smart: Don’t short change yourself
Where there is crisis, there is also opportunity, so the saying goes.
Fear over the state of the economy and the trajectory of the pandemic are valid concerns.
However, these emotions should not hold you back from investing your money in companies that are resilient and displaying strong growth.
There will always be bad news swirling around if you look hard enough.
But I’d argue that the opportunity cost of not investing is too large to ignore.
By holding back, you risk letting your hard-earned money languish in a bank account earning an interest rate that can barely keep up with inflation.
The key is to look for opportunities that exist amid the uncertainty.
As you do so, you can start to build up a secure retirement nest egg for yourself and your loved ones.
Note: An earlier version of this article appeared in The Business Times.
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Disclaimer: Royston Yang owns shares in Facebook and iFAST Corporation Limited.
