As many businesses begin to idle production as economic activity slows, investors may want to dive into which companies are still producing products, at what specific rates and determine from such data whether such companies represent buying opportunities right now.
My take on such an approach is that it will only be in hindsight, perhaps a year or two from now, where we'll be able to look back and see which companies rebounded the best from the depths of misery we find ourselves in. Therefore, choosing companies now on the basis of whether or not production has been halted or slowed is not a good idea for a couple of key reasons.
Before I dive in: the most important exercise I think investors need to engage in right now is throwing away the earnings reports for every company this year. They don't matter in the context of the long run. (I'm writing to long-term investors who are able and willing to stay invested for at least a decade).
Doing so will remind investors of the following.
First, governments are going to begin bailing out industries and companies like never before. So if the business you're considering might fit in to the “too-big/potentially-expensive-to-fail,” category, then you're good.
Second, most would agree that the market is pricing in at least two quarters of serious impairments to earnings and revenue. So unless you think this pandemic will continue into 2026, in which case the world will officially end, then a lot of the future pain has already been priced into most stocks now.
Invest wisely, my friends.
