How to Make Money from Fear: Never Waste a Good Crisis

Returning home from a holiday always leaves me with mixed feelings.

Part of me longs for the adventure to never end. While other parts can’t wait to get back home, namely to my own bed.

My last trip though, which came to an end on Saturday, was perhaps the most polarising of all.

I’ve just spent a little over three weeks exploring Japan. It’s easily been the most fascinating and unique trip of my life.

Japan is truly like nowhere I’ve ever been before. Their culture and way of life is just so foreign to Australia, yet so charming. Well, most of it anyway.

But, as much as I could gush over this holiday, I have to say I’m happy to be home.

Not because I felt like I’d seen or done everything I wanted. Far from it actually, I’m already preparing a list of places that I want to go back to next time…

No, I was happy to be home because of COVID-19.

Better known as the coronavirus.

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Ignorance was bliss

See, when I left for Japan there where two confirmed cases of COVID-19 in the country.

For the most part the authorities seemed to have things on lockdown. I wasn’t all that worried, and the full plane seemed to suggest others felt the same way.

Once we arrived in Japan though, things quickly changed.

It wasn’t long before more cases began popping up. Not to mention the now infamous cruise ship, the Diamond Princess — a floating petri dish that saw hundreds of people infected.

I was aware of very little of this though. And what little I did hear I brushed off.

Call it ignorance, stupidity, or whatever you like — at that point in time, all I cared about was not ruining my holiday.

Today, with my trip over and the comfort of hindsight, I can say I probably was a little too ignorant.

Don’t get me wrong, I’m not all that worried about COVID-19. It’s just that I could have stayed more aware of it. If only for peace of mind, if anything.

Indeed, it wasn’t until I was sitting in the airport waiting to fly home that I truly grasped the situation. Japan, as it turns out, is actually struggling to contain this virus.

The latest tally of infected stands at 242. And that doesn’t include the 705 passengers from the Diamond Princess.

Suffice to say, it was a lot worse compared to when I left.

In fact, on the day I was leaving several major tourist attractions announced plans to shut down. Tokyo Disneyland, Universal Studios, and a plethora of museums across Japan are now all shut until at least mid-March.

On top of that, Shinzo Abe has closed every school across Japan. Right up until the end of their school year in late March.

Now when I hear about all of this, I can’t help but think of the costs.

The amount of money Japan will need to fight this virus will be huge. Not to mention all the lost revenue if tourists steer clear.

Just imagine the fallout if this isn’t all cleared up before the Olympics. It’ll be an economic disaster for the country.

But, for some industries it is already proving to be a massive opportunity…

As the saying goes, ‘Never waste a good crisis.’

Function or fashion?

Without doubt, the most shocking part of my trip was Japanese attire.

Namely, the fact that almost everyone was wearing a mask.

Now I don’t know about you, but I’ve read mixed reports on the effectiveness of masks. As far as I understand, for the average person they’re useless for preventing infection. If you’re already infected though, they can be a great way to stop you spreading the sickness.

I’ll let you make up your own mind on that matter.

Point is, I didn’t wear a mask at all in Japan, which was a stark contrast to the vast majority of the locals…

Because of this, the manufacturers of said masks are booming. Most reports state they simply can’t keep up with demand.

It’s even forcing the hand of others to pivot into the field. Sharp, for instance, has had to turn one of their TV factories into a face mask supplier. Churning out up to 500,000 masks per day.

None of this should really surprise anyone. It’s a logical response, even if the masks aren’t all that helpful.

However, the truly shocking part to me was what these masks sometimes looked like.

People were turning these masks into fashion statements. Often wearing sleek designs or stylised prints on their masks. A trend that you can also find online.

Take a look at this from Etsy:

I seriously can’t believe how many people were wearing unique masks like these.

It doesn’t appear to be just some street, chic fad either. Masks managed to make an appearance at the New York Fashion Week catwalk a few weeks ago. Showing off extravagant pieces like these:

Perhaps we’ll soon all be wearing masks. If only to match them with our outfits…

Make hay while the sun shines

So what does this mean for you?

Well, short of making your own fashion statement with a mask, it proves that opportunity still abounds. For some companies and industries, anyway.

Even with the current collapse in global markets, good stocks can be found.

Take US mask maker 3M Co [NYSE:MMM] for example. Back in 2002, at the height of the SARS panic, this company boomed. It just may do so again.

Or, for a more local example, you can’t ignore the meteoric rise of Zoono Group Ltd [ASX:ZNO].

At the start of December this stock was trading at just 24 cents per share. As of right now, it’s at $2.22 per share.

That’s an 825% gain in three short months!

The reason for this success is because Zoono has been actively working to combat COVID-19 for months now. In fact they recently announced that their latest sanitiser is 99.99% effective against the virus.

It’s a case of the right product at the right time.

Which is exactly what crises like these are all about. You have to find the hidden gems that defy the wider downturn.

I’m not saying it’s easy, but they are out there.

If you can spot the broader trends as they happen, then you can turn it into an investing advantage.

The challenge is learning how to do it. But what better time to practice than now?

Regards,

Ryan Clarkson-Ledward,
Editor, Money Morning

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