What was the first thing that you bought when Singapore announced that it had raised the level of the Disease Outbreak Response System Condition (DORSCON) to Orange?
If you had rushed out to stock up on toilet paper, then you certainly weren’t alone.
According to US retailing giant, Walmart (NYSE: WMT), which takes the pulse of American consumers, the first items that flew off the shelves were toilet paper, hand santisers and disinfectants, as households loaded up their shopping trolleys in a flat panic.
Panic buying led to more panic buying, as the run on loo rolls rippled through the supply chain.
The next phase was flour and baker’s yeast, as housebound consumers turned their hand to baking. It wasn’t just Americans that were baking their own bread at home. In the UK, millers have been working around the clock to keep up with unprecedented demand.
According to Walmart, we are now in the “hair-dye phase”, as consumers become more self-aware. They already have enough toilet rolls and probably have more than enough bread to feed an army.
So, they are now more concerned about the way they look. And it’s not just hair colouring that is in demand. Hair clippers and beard trimmers are seeing a spike in demand too, as people turn their hand to cutting their own hair.
There are some interesting parallels with the stock market.
Initially, self-preservation sent investors running for cover by selling all the shares in their portfolios. They sold indiscriminately, throwing the baby out with the bathwater. Panic selling led to more panic selling.
Then came the awareness phase when investors realised that at some point the virus would burn itself out. Exactly when that might be is anyone’s guess.
But we all seem to be a bit better at coping with the sudden change of circumstances that we find ourselves in. We somehow manage to cope – as we always do – even though it still feels uncomfortable to do so.
However, the pandemic will end. Consequently, we will need to address the same issues after Covid-19 as we had to before. Sitting on a pile of cash is somewhat pointless….
…. We still must make sure that we have enough money to sustain us when we decide to retire. Cash that is losing its buing power is not going to help.
If anything, we need to invest even more than before, as the global economy enters a prolonged period when interest rates could remain lower for longer.
We will all have to ensure that our money works even harder to compensate for those pitiful interest rates, lower dividend yields and possibly higher taxes to pay for all the money that governments and central banks have thrown at the coronavirus.
There are no free lunches, even if you might have learnt how to bake your own bread and cut your own hair in the last couple of weeks.
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Disclosure: David Kuo does not own any of the shares mentioned.