“Never let a good crisis go to waste” – Winston Churchill
When the pandemic started I for one thought that investors were going to take money out of the market due to the global catastrophe that was about to ensue. They would instead opt to liquidate a good portion of their stocks and have live cash on hand. My assumptions were wrong, instead, investors just shifted money around into different markets.
Markets that flourished pre-pandemic such as the airline industry, real estate, events, etc. Was given a downgrade and money was fueled into tech stocks which were seen as a better option to weather the storm.
Those smart investors were rewarded greatly as we saw the market kept on going up and the bears left hanging. We saw Google, Apple, Amazon, and Tesla all reaching trillion-dollar market capitalization. A feat that is unprecedented in recent times. We even saw a bull run in cryptocurrency which we are still witnessing today.
If we should extract the pandemic and causalities from the picture and look at it objectively, it was a good year for investors who had the stomach to invest.
If we look at the broader picture and analyze the entire system, we can see the different effects the pandemic is having on different areas of society such as inflation, jobs, etc.
Darlings of the Pandemic
Throughout the pandemic, there were stocks that would seem to be darlings for investors to dabble in. These companies were quite adaptable to the “lockdown” period because they fit the home-based lifestyle. They all soared while giving investors favorable returns.
For example, Peloton Stock rose to approximately 470 percent. Zoom on other hand really skyrocketed passed 500% at one point. Today, Peloton is down 64 percent for the year and Zoom is showing signs of cooling as they plunged nearly 17 percent in late August.
Edtech stocks such as Chegg plunged close to 50% in a single trading session in November.
Back to Normal
As the world economy slowly gets back to normalcy, persons are yearning to go out and socialize again. Instead of Zoom chats, they want to meet in person. Peloton Group, which also provides an at-home workout suite such as an exercising bike is seeing a massive slump in its stock this year.
One of the main reasons is the fact that as traditional gyms start to reopen, we will see persons signing up for gym memberships. Investors are now funneling their money back into markets that were once yielding favorable returns such as real estate, events, and the airline industry.
Zoom and some of the others will still be around. The pandemic might be over within a couple of years. Although it’s hard to assess given that we are close to two years since the first case and we are still struggling to a grip on this thing.
What is also true is the fact that it has sped up a lot of innovation and adaptation that was lingering within niche groups and early adopters for years that are quickly gaining mainstream traction.
