How to vaccinate your portfolio against coronavirus

The spread of coronavirus could pose a threat to your portfolio, says Merryn Somerset Webb. Make sure it's protected

This week brought a slew of interesting statistics on inequality in the UK. It turns out that income inequality is slightly higher than we thought (albeit not rising – which is good). More interesting, however, were the numbers on longevity equality. The latest show (pleasingly) that while the rate of increase in UK life expectancy has slowed we are still living longer than ever. Female life expectancy is now 82.9 years and male 79.5 years. However, these numbers do mask some miserable divergences: there is close to a 20-year difference in the length of the lives of those who live in the poorest and the richest areas of the UK. This is a gap that is going to get wider. That’s not because the life expectancy of the poor is likely to fall, but because that of the very rich will rise faster. 

Anyone who came to our MoneyWeek conference late last year will have heard longevity expert Jim Mellon talking about the various expensive pills, devices and treatments he expects the rich to use to stay alive over the next few decades. Gradually they will pull further ahead of the rest of us. Many in the US currently believe they have a billionaire problem (too many people with too much money buying too much power. Not long now and they will have a billionaires-living-too-long problem as well. That’s something that will add a whole new dimension to the inequality argument. Politicians can’t promise to redistribute years lived quite as easily as they can promise to redistribute cash. Instead, when it comes to longevity the only equality option is to find a way to level up. That’s not easy – or cheap.

Shielding your portfolio from Covid-19

Still, while we wait for governments to catch up on this, what of the portfolio you are building to support the long old age MoneyWeek readers are likely to have? Last week I suggested that, with the fast spread of the Covid-19 a rising risk, you start shifting some money into the oldest and best of safe havens. If you used that as a reason to top up your gold holdings, you’ll be pleased. Most stockmarkets have had a horrible week, but gold hit a seven-year high on Monday. Whether it spikes higher or not in the next few weeks will depend on how the virus moves from here and how governments react to it. The more schools close, the more group gatherings are cancelled and the more freedom of movement is curtailed, the higher gold will go. We aren’t virus specialists, nor do we have any particular insight into how global governments will manage the crisis (beyond knowing that it won’t be satisfactory), so we can’t make a perfect call on that. 

What we can do is suggest that you think of safety first when it comes to your investments (I’m taking it as a given, by the way, that you are doing the same with your health). If supply chains falter and global profits take a nasty hit – which they will – where might your money be safe (or at least in less danger) at the moment? In this week's magazine Max King gives his take on this (you can mitigate your equity risk with careful buying of bond funds); we explain why Japan, while not exactly holding up nicely in the face of crisis, is at least cheap; and John Stepek has some wise words on the market’s most obvious contrarian trade. The virus might just be marking the turning point to value we’ve been expecting for some time.

Recommended

The coronavirus is scary – but it's irrelevant to your investments
Investment strategy

The coronavirus is scary – but it's irrelevant to your investments

The spread of the coronavirus is causing alarm around the world. And, while it could be a serious short-term threat to human health, it’s not somethin…
24 Jan 2020
The British equity market is shrinking
Stockmarkets

The British equity market is shrinking

British startups are abandoning public stockmarkets and turning to deep-pocketed Silicon Valley venture capitalists for their investment needs.
8 Nov 2019
The US clampdown on firms “spoofing” the markets
US stockmarkets

The US clampdown on firms “spoofing” the markets

American regulators are slapping record fines on firms that cheat the markets using techniques such as “spoofing”. Even tougher action looks to be on …
24 Oct 2020
China’s V-shaped stockmarket bounce
China stockmarkets

China’s V-shaped stockmarket bounce

China's economy contracted sharply in the first three months of 2020, but it has since staged a V-shaped comeback, with the CSI 300 index up more than…
23 Oct 2020

Most Popular

Why commodities could be the best investment for 2021
Commodities

Why commodities could be the best investment for 2021

There’s plenty for investors to worry about right now. But things will inevitably recover. And the sector most likely to do best when they do, says Jo…
22 Oct 2020
Negative interest rates and the end of free bank accounts
Bank accounts

Negative interest rates and the end of free bank accounts

Negative interest rates are likely to mean the introduction of fees for current accounts and other banking products. But that might make the UK bankin…
19 Oct 2020
Buying bitcoin could be the best way to play the remote working boom
Bitcoin

Buying bitcoin could be the best way to play the remote working boom

The coronavirus pandemic has accelerated the move to home working, flexible employment practices and the rise of the “digital nomad”. One of the best …
21 Oct 2020