A hint of what lies in store for investors in a post-covid-19 world is the fall in Moderna’s stock price. It peaked at $484.47 on August 9, 2021 and traded at $142.47 at the end of the session on February 15, 2022. Moderna and other folks who make vaccines to fight Covid-19 saw their share price rise dramatically during the height of the pandemic. Moderna sold for $18.89 a share at the start of 2020. Pfizer is also down by more than half in the same time frame. If you are going to invest for when Covid is gone you need to do more than get out of vaccine makers. There will be significant trends in the coming years, some propelled by the pandemic and others by science and American demographics.
Investing in the Aftermath of Covid-19
It looks like life could return to something like normal as Covid’s omicron variant recedes. Aside from getting out of stocks that only rose because of the pandemic, where should you be investing in the aftermath of Covid-19? There are three trends to consider. One is demographics. A whole new generation of investors is poised to enter the market. Another is the accelerated pace of the digital economy. For the nearer term, there is pent up consumer demand from folks with money who had no place to spend it in the last two years. This is part of the current surge in inflation. And, with these factors as a baseline, investors will need to be mindful of the chaos that dictators like Vladimir Putin, Xi Jinping, and the crazy guy in North Korea can visit on the world as evidenced by Russia threatening to invade Ukraine.
A Surge in Consumer Spending
The Covid-19 experience has not been the same for everyone. Many businesses and many people have been devastated. Others kept their jobs. Their stock portfolios prospered. And, many people put off travel, purchases, and other expenditures because of the risks associated with the Covid-19 virus. We are seeing a wave of purchases of smart phones, televisions, and smart everything at the same time that the supply chain coming out of Asia and especially China is clogged up. Because many folks have money to spend they are willing to pay what it takes to get a new car, newer used car, or anything. The supply and demand relationship still being what it always is, that means higher prices followed by higher wagers, and then higher prices. Inflation is at a 40-year high. The Fed will be stepping in to tame inflation but they cannot speed up the supply chain or make China change its Covid-19 zero tolerance policy. There is a very real risk of a recession as the Fed tightens money supply at a time when much of the solution needs to be more boats coming out of China and reshoring of manufacturing in the USA.
An Expanding Digital Economy
Looking at the longer term post-Covid, digital money, e-services, and e-commerce are likely to be increasingly important in our lives. Data analytics and data sharing, remote work collaboration, cloud computing and more became more prevalent when we have all had to work from home. The companies in the best positions to benefit from this wave of innovation are the big tech giants that thrived during the recovery from the Covid Crash. We can look for new technology like the Metaverse to find practical and profitable applications. Given enough lead time new winners are likely to emerge. And, the prospect of a US digital currency has implications for the cryptocurrency universe where we see movers and shakers already looking to develop web3 to integrate crypto.
Millennials Became a Force in the Stock Market
Like the baby boomers before them, millennials hit age 40 with about 6% with investments in the stock market and like the baby boomers this degree of investment is likely to surge over the years. Millennials are twenty-two percent of the US population and the Generation Z crowd right behind them is twenty percent. As these folks enter the market in greater numbers we can expect their investments to help drive prices. The picture of a millennial using the Robinhood app is not the picture to keep in mind but rather the sum total of these folks as they became the dominant force in the investing world.
Will Covid-19 Ever Be Gone?
A single Covid-19 virus can produce billions of offspring. Although viable mutations are rare they only need to survive occasionally in order to create the next delta or omicron variant. There is the distinct possibility that Covid-19 will be with us in some form for years to come. As it hangs around the sum total of herd immunity will eventually be reached. Or enough people with have enough immunity that with yearly vaccinations society will return to something like normal. Then we will only have to worry about North Korea launching missiles, China threatening Taiwan, and Russia wanting to take back the “glory” of its USSR days.
Invest for When Covid is Gone – Slideshare Version