Share prices are almost uniformly down across the board due to the declines caused by coronavirus outbreak.
The human side of this is terrible and we must do what we can to limit its spread so that life can return to normal sooner. On the investment side of things, share prices are cheaper and if you have available cash to deploy I think it would be a good idea to use some of it.
Not all of it straight away though. You need to keep some cash as your emergency fund. And share prices may fall further, so you should want to keep some cash for that.
But, these types of falls usually only happen once a decade on average. The recovery could be quick once we're through the worst of it.
But what are you supposed to buy?
Well I think it's times like this that show why you should maintain a high-quality portfolio before this type of thing comes along. Then you hopefully don't have to worry about the survival of your shares, though I don't think travel businesses could have expected the rapid and severe nature of this scenario.
And I think the focus should remain on 'high-quality' as they're the most likely to get through this. There are some shares like Altium Limited (ASX: ALU) that are great and a lot cheaper, I'd love to buy more.
The shares may decline even more, but we can't know how far they will decline which is why I'm happy to steadily buy more as they decline
But overseas shares have also been sold off too. Some of the best businesses in the world have been sold off indiscriminately.
What I bought
That's why I decided to buy shares of Magellan Global Trust (ASX: MGG) – more than once.
Magellan Global Trust owns many of the world's best businesses in its portfolio like Microsoft, Alphabet, LVMH, Alibaba and so on. Many of its holdings have great balance sheets which provide good security.
Plenty of the holdings have offerings that are digital, or generate a large amount of earnings from China – which is largely back to normal running after getting in control of the spread of the infection.
Before this sell-off it generally traded around the level of its underlying net asset value (NAV). Most of the money I invested into Magellan Global Trust was when it was trading at a discount of 10% or more to its NAV (and later that day its share price recovered, so I made a two timely purchase there).
Is it a buy now?
Firstly, bear in mind that the Aussie dollar has weakened against the US dollar.
Second, it is quite likely that US shares will fall overnight in reaction to the weekend's infection numbers and other US developments.
At the time of writing the current share price discount to the live NAV is around 20%, though by the time the US and European share markets close the discount will probably be closer to 10% than 20%.
Even so, it's a good discount now and the Magellan Global Trust share price has dropped 38% since 21 February 2020. I'd love to buy some more, but I can't now (due to trading rules) and there are other things that are also trading at great prices.
