WHAT INVESTMENT CRITERIA ARE APPROPRIATE TODAY, in Light of the Coronavirus Threat?

INTRODUCTION

In this article, I discuss how the relative importance of various investment criteria seems to have shifted as a consequence of the current coronavirus situation. Specifically, I highlight criteria that appear to have become relatively more important, as well as others that apparently are now relatively less significant.

I shall be drawing heavily on my own experiences from my investment firm, S. Ugelstad Invest AS (SUI), as well as on discussions with several members of the Lorange Network. A short note before we begin: while the various factors I’ll be discussing are presented in a dichotomised manner, the reality is that they are typically overlapping and, further, any one investor will tend to give different weights to each of these factors from those that other investors such as myself might do.

So, in the end, what will things be like in a post-corona world? Are we going to go back to the pre-corona criteria, or are we experiencing permanent shifts?

Note, too, that all the investment criteria I’ll be talking about, except for factor 1, in essence represent “check controls” – are these factors sufficiently relevant now or not? As such, the criteria represent qualitative hurdles to satisfy a project’s “goodness” (or lack of it), complementing the more conditional discounted cash-flow analysis undertaken under item 1 below. All the criteria I’ll be discussing in section 2, though, might fall into this category, representing additional “go” or “no-go” checks to