Over the past few months, there has been perhaps more chaos than any of us have ever experienced. Entire countries have been shut down, supply chains shattered, and income has been halted. If anyone says they know exactly how this will turn out, they are lying!
It is impossible to forecast exactly how this process will turn out in the short run. For those who have been prepared and have savings, you may still want to invest in Pittsburgh or in other markets during this time of weakness. So what are the best places to invest during the Covid-19 pandemic?
The answer is, there is no perfect investment! The best place to invest in our opinion, is into whatever is the most distressed or discounted at any point in time. If that is into stocks that are cut in half but still have very strong businesses, maybe a property worth twice what it is listed for, buying a business for pennies on the dollar, the list goes on.
This strategy is applicable for any environment. No matter what the economy is like, there will be opportunities to find distressed investment opportunities. The Pittsburgh Investor approach is to seek these opportunities in multiple different asset classes in Pittsburgh. It's important to not get emotional on how you make your money. If you focus on real estate, but see the financial markets dipping way below reasonable levels, it may make sense to allocate some of your savings to this investment. If you are involved in banking and lending, but see opportunities to invest in local businesses in Pittsburgh at a discount this can be a phenomenal investment.
So you are reading this for direct answers not just general advice applicable in different market conditions....
Here is a list of investment opportunities that I see available in the market place:
The market has skyrocketed over the past decade. The S&P 500 has gone up hundreds of %! Finally there has been massive sell offs in the market over the past few months. There are countless stocks and industries trading below what the shares would be worth if the company was sold. This is a massive reduction to the risk of these investments. Some industries are dramatically hurt by the virus. This includes commercial real estate, luxury items, banks, and oil and gas. These are industries I would stray away from at this time as they are generally over-levered with debt and have huge issues with the market place at this point in time.
Single Family Housing
Real estate will most likely finally lose steam. In the past several years, real estate in Pittsburgh has jumped dramatically. The market has been very hot and prices have been bid up very quickly. With the loss of employment, and possible business failures, this will cause mortgages to become delinquent and sellers will be seeking ways to find cash. Sellers have built a tremendous amount of equity in their properties over the past decade. I anticipate sellers to begin cashing out at a discount to get cash quickly. I also expect some of the larger investment companies that over leveraged with high interest debts to take some losses in order to find liquidity for their business.
Single family housing will be a great place to invest as families are staying inside now and housing is more important than ever. It is also very easy to sell a house compared to a large commercial building, especially when the credit markets have shrunk very quickly and large acquisitions have slowed down. If you need to sell, it will be an easier process than a large building during this tough time.
It's sad to say, but there will be thousands of companies that go under during this pandemic. With a sudden drop in sales to zero, and funding already running dry from the SBA, I expect to see many small businesses fail in Pittsburgh. This is a horrible reality and very few companies have planned for any major impact like the virus with cash reserves, but it appears inevitable for some industries. As an investor, this is a great opportunity to seek businesses that have potential after the virus, but seeks cash to keep the doors open. Business owners will have to adapt and use resources outside of banks. That means they may consider selling equity for cash to keep the business afloat. As an investor in Pittsburgh, this is an opportunity to get exposure to companies with promising futures at a massive discount. You will also now have future cashflow if that company does survive and continue to grow.
As an investor, there is always an opportunity. There are countless markets, and even more asset classes. While stocks and real estate is generally where people build their wealth, that's not the only place that has upside potential. Continue to find investment opportunities that match your passions and skill sets. You never know when something will pop up to put your money to work in Pittsburgh.