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COVID 19 RELOAD : Perception Vs Reality

Posted By: Admin

This time last year we were under a severe lockdown due to the Covid 19 Virus spread. There was  complete lockdown and fear of the Covid virus and the impending death was scary to say the least. We were all indoors  lighting candles, banging vessels to bring positivity into our lives amidst the darkness spread from the fear of death by the virus. 

Cut to today, the Virus continues in India, with an increased vigour and the charts show a climbing trend of cases that has been unprecedented. Has the virus become more virulent or has the  immunity of people dropped such that so many are affected ?

No one knows .. but one thing is clear 

Last year fear was at its highest as the covid was an unknown virus and its fatality was suspected to be really high. However now it is clear that Covid has the same fatality rate of many of the viruses we are already familiar with say 1% or thereabouts. So it seems that fear seems to have disappeared from people’s minds and they have abandoned all safety protocols like washing hands constantly, wearing masks in public places leading to an increase in infections. 

So,

Last year  :  FEAR ( Perception) was high    = Low Count( Reality) was low.

This year  : Lack of FEAR ( perception)   = High Count (Reality) 

Is there an learning for us,  

 Perception & reality are two very different things. 

While investing too, we need to look at things from two lenses , stock market is all about perception in fact it is perception of the future discounted to the current. While doing this, one should also run their investment through the lens of Reality. 

Example, last march when the stock markets fell 35%, the perception was that the  world was at the cusp of a big doom brought about by the Covid virus. So stocks were available at less than their book value( that is the cost of setting them up). While it was scary, if investors had run their reality filter at that time, they would have found that while covid will create disruptions and  impact profitability it would not kill most businesses, and if one were to observe closely some businesses would benefit from Covid as well. We are seeing that investors who used the reality lens then are sitting pretty now as compared to  people who were  only driven by perception. 

So run your mind with twin lenses of perception and reality, I am sure you will get a better sense of the investment to be  made. 

As far as the Covid is concerned, do not FEAR, but respect the protocols of social distancing , hand sanitation and maintaining proper personal immunity so that we can all emerge from this stronger. 

Wishing you the best.

By Babu Krishnamoorthy, Chief Sherpa 

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