How Investors Are Weathering the Corona Storm

An Atmosphere of Uncertainty

The investment industry, like all things, lives in an atmosphere of uncertainty in many cases — and uncertainty can have serious consequences when it comes to investment.

Global Venture Capital Deals (in billion USD) — Reuters

What Is Having an Impact?

Meanwhile central banks across each continent have been making large injections into financial assets — reportedly, up to $9 trillion, which is nearly five times as much as the $2 trillion used during the 2008–09 crisis. This is just one factor that is being evaluated when considering why the economy, and in turn the investment industry, is being affected so dramatically — whether for the better or for worse.

Industries in Turmoil

Some of the worst affected industries to feel the impact of the pandemic are undoubtedly oil and gas drilling, leisure, hospitality, and of course travel. The airline industry has been consistently inconsistent. The small recovery at the beginning of 2021 was made null and void and plummeted due to national lockdowns, vaccination programs, and third, fourth, and possible fifth “waves” of Covid-19 variants.

Blossoming in the Darkest of Times

Conversely, there have been industries which have managed to blossom during this period. Some may say that this is to be expected. NYU Stern School of Business Professor and digital transformation researcher Arun Sundararajan noted that “crisis can be… a catalyst or can speed up changes that are on the way — it almost can serve as an accelerant.” This is most certainly the case when it comes to the acceleration of global automation and digitization.

Consideration for the New Normal

As a private equity or venture capital firm, it is most certainly time to think about your own portfolio and business model, but more than that, to start considering the business models of the companies within your portfolio. Do their business models have mobility with the possibility of change according to government policy and the current economic environment? Can they shift as seamlessly as possible to meet the moves in consumer preference?

Time to Rebalance

Investors are looking to rebalance their portfolios and defuse unnecessary risks associated with potentially volatile markets. Perhaps now is the time to ensure that there is sufficient diversification across a variety of regions and spanning multiple sectors.

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James Ahern (Laidlaw)

James Ahern (Laidlaw)

James Ahern currently serves as managing partner at New York based Laidlaw & Company, Ltd. and is head of its capital markets division.