For those wondering about their financial investments or considering playing the market during the Covid-19 pandemic, one expert warns: “be cautious, be conservative.”
James Brander is a business economy professor at the University of British Columbia’s Saunder School of Business.
He says some people will do well financially out of the pandemic, particularly those with a lot of information and understanding about markets and firms. That includes people who bought shares in internet-based companies like Shopify, or who bought early on and when the market crashed.
But that doesn’t mean everyone should be making big financial moves during the pandemic.
“It’s really a risky strategy to try to do that as an ordinary investor,” Brander said. “As an ordinary investor, your best strategy in situations like this is just to be cautious.”
He said mutual funds – a pool of investments selected by a fund manager – are a good strategy for most investors.
As for financial markets, Brander said they took a steep dip during the start of the pandemic but have come back substantially.
“The surprising thing is they have done a lot better than a lot of people might have expected,” he said.
In Canada, he said the market has recovered about 40 percent of its value.
Looking at the Toronto Stock Exchange – the major Canadian stock exchange – Brander said the market is down compared to six months ago. However, he said, it’s only slightly below where it was this time three years ago and slightly above where it was a year and a half ago.
“It’s a negative for investors, but it’s not a disaster.”
What the market will look like in the future, Brander said, largely depends on what happens with the pandemic, like if a vaccine is created that greatly reduces transmission.
“There’s no reason why the economy can’t come back very quickly and, when it does, I think the markets will come back to where they were before,” he said. “But the question is, when will that happen?”
Investing in northern firms
When it comes to investing in the North, Brander said it is possible to tailor your investments to emphasize companies that do business in the North.
He noted, though, there aren’t many of them and it could be a “tough play to make” as you’d have to give up diversification.
“While I think it’s possible to do it, it’s probably not a good strategy,” he said.
“Diversification is always the conservative risk-adverse strategy. I think that’s the right strategy at this time as well.”
Overall, Brander said the pandemic “is a time when people need to just get through it.”
The NWT Department of Industry, Tourism, and Investment had not responded to requests for comment by the time of publication.