Stay safe! That is definitely the catchphrase of the day, and I hope that all RM readers are doing just that. In terms of your portfolio, there are a few basic steps that you can take to de-risk it. I am sorry if this advice is repetitive (it feels like I have typed these sentences before) but it absolutely is relevant in the current Covid-19 era.
Watch out for whipsaws. We are experiencing one this morning as markets bounce on hopes of a Saudi-Russian oil production cut deal after falling initially on the sobering news of 6.6 million initial unemployment claims in the U.S. last week. How to play such market action? Don't!
You can't react as quickly as the machines do. Please don't try to. It can be very expensive. Take a 40,000 feet look at the market and you will save money.
Today's rally comes as the implied volatilities for options contracts (usually expressed by the CBOE's VIX index) are at extremely high levels versus historic norms. The VIX has fallen today to a level of 54 as of this writing, but that is more than triple the 12-20 "sweet spot" that index lived in for the better part of the past five years. So you should be selling options contracts against existing positions, and if you are buying out of the money options (I actually bought some puts in the depths of yesterday's plunge) make sure you are doing so in small amounts. There is nothing wrong with a Hail Mary bet, but it should compose a very, very small portion of your portfolio. I remind myself of this on a daily basis.
Covered call writing, on the other hand, should be providing you with a strong income stream (owing to the heightened implied volatilities) in these troubled markets.
Buy balance sheets. If you are committing new capital to stocks here, please take a quick look at the relevant companies' balance sheets before you do. This is much more labor-intensive than it should be, which saddens me. As if the credit ratings agencies haven't done enough to generate bad vibes, they make it very difficult to get even the most basic information on the companies they rate.
Typing "Apple credit rating" (Apple: (AAPL) ) into Google (Alphabet (GOOGL) ) is not a bad solution, but it will force you to work harder. Moody's requires registration, S&P paywalls everything and Google will send you to pages at fancy B-schools like Stanford and Wharton with instructions on how to log in to Bloomberg terminals at places like Vandelay Hall and Varndsen Library. Unfortunately not everyone has access to a Bloomberg terminal.
I am sorry it is not as easy to find basic credit metrics as it is to find equity metrics like P/E, yield and market capitalization. Please believe me when I tell you it is worth doing in a time of crisis. Sadly, we are in one now.
I am so embarrassed for my industry when it comes to educating investors on basic creditworthiness. I just ran a Fidelity stock screener and the only one of the 127 available metrics that would equate to a creditworthiness check is an opaque "financial health score" from S&P Global Market Intelligence. Well, on the list of companies scoring a "99" (out of 100) is Casper Sleep (CSPR) has been a disastrous performer since its February IPO -- down 70% since February 6th -- and every article I have read on the company indicates that analysts and investors are worried that Casper's debt-laden balance sheet makes the company a very real candidate for (pardon the pun) the Big Sleep, i.e. bankruptcy.
So, performing credit research is not easy, but let's not wait for Green Shoots or whatever mindlessly optimistic tripe about the economy financial news sites will try to foist on unsuspecting investors. Covid-19 is really, really, really bad for the global economy. Companies will go bankrupt. Banks, including those in the U.S., will be on the hook for hundreds of billions and likely trillions of dollars of delinquent loans.
Do your homework. Read individual company SEC filings, and watch stock prices (a useful if far from perfectly accurate indicator of the underlying company's creditworthiness).