The world has seen many crises before. While each crisis is different, Ray Dalio (founder of Bridgewater Associates) reminds us that history has a tendency to teach us patterns that we can use as templates to assist us in successfully navigating through the storm.

Covid-19 has caught the world by surprise, and although there are still unknowns, one thing is sure for most individuals, businesses and governments: it has created holes in income statements and balance sheets.

An income statement is a summary of all income and expenses providing a net income after tax. The hole on income statements is mainly due to loss or uncertainty of future income.

The balance sheet side is effectively the health of your total position (assets minus liabilities) at any given point.

Understanding these basic concepts provides a template on possible levers to pull:


  • Income

The total size of the pie shared by the world will most probably not change that much in the medium term, but the difference will be who owns what part of that pie. Human nature has a great ability to adapt over time and the entrepreneurial spirit of some will prove to be profitable during these trying times. Hence, more effort and creativity will be required than before. You might have to improve your skill set via formal online education, or realise that your business won’t be relevant for much longer. Invest in yourself and your business to do better with the things that will matter.

  • Expenses

This is probably where the most can be done in the short term.

All of us are reminded again about what is critical and what is not, and all of us should be determined to optimise where we can.

Cutting expenses is a bit of a double-edged sword, as the micro actions that we will be required to take will have a macro impact (on the overall economy). One person’s expenses are another person’s income and if many businesses decide to cut expenses, many people’s income will drop and hence the economy would contract.

The reality is that the only way to avoid cutting expenses is to increase “income”. This will be a daunting task for many and given the global uncertainty, many traditional investors will sit on the sidelines as they struggle to calculate the risk, i.e. the return needed to make a profitable investment. Entrepreneurs who have the ability to own more of the pie will therefore have to be extra skilful in convincing investors (people with strong balance sheets).


  • The strength of your balance sheet will determine how long you can survive. If you have a money market account, for example, ensure that you try to maintain this buffer as long as possible, and rather cut unnecessary expenses first.
  • If you have more than sufficient buffers, uncertainty provides fantastic opportunities for generating investment returns.
  • Investment principles have become principles because they were able to survive the test of time. The wise wil continue to apply those principles and not confuse them with the gambling tactics of friends who struck it lucky.
  • Clearly identify your objectives and treat each on its own merit; for example, being cognisant of time horizons, diversification principles and valuation levels of potential investments.
  • If you can find someone who you can trust, share your ideas to make sure that you are not caught off guard by your own blind spots.

The journey will still be difficult for some time, but how you travel can make a big difference in whether you will reach your destination or not.

By René Olivier (CFA), Managing Director

René Olivier (CFA) is the Managing Director of Wealth Management at IJG, an established Namibian financial services market leader. IJG believes in tailoring their services to a client’s personal and business needs. For more information, visit

2023-07-27T09:50:00+00:00 June 8th, 2020|ECONOMIC PULSE, NEWS|