Will A Massive COVID Wave Set Us Back In 2022? - InvestingChannel

Will A Massive COVID Wave Set Us Back In 2022?

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Gas Pains  

The Bureau of Labor Statistics released inflation data this morning. 

Everything came in pretty much as expected with the CPI (consumer price index) increasing 8.5% year-over-year, just one-tenth of a point higher than predicted. 

After a 0.8% increase between January and February, prices across the board popped 1.2% February to March. 

Baby, You Can Drive My (Used) Car, If You Pay For Gas

Energy fueled the overall increase with gas prices, for example, jumping 18.3% in March and 48.0% year-over-year. Energy commodities posted almost identical increases.

Still up 35.3% annually, used car and truck prices declined 3.8% from last month. 

What Does It Mean For Stocks? 

The market reacted positively to the data, mostly because there were no big surprises and core inflation – everything but food and energy – rose 6.5%, inline with expectations. This gave some analysts hope we might have finally reached peak inflation. 

Remember what we like to say around The Juice offices when somebody cries in the breakroom. 

We’re living through a moment in time. A blip in the radar screen that is your life. 

If you’re a long-term investor – or even if you simply don’t need your money anytime soon – stay the course and buy when opportunity presents.


Will A Massive COVID Wave Set Us Back In 2022?

Key Takeaways:

  • There’s a worst case COVID scenario floating around. 
  • Chances are almost no matter what happens, America isn’t going back into lockdown.
  • Long-term investors should stay the course and maybe consider speculating again on stay-at-home stocks.

Check out this headline from a recent Fortune article – 

A new COVID wave is probably coming, and America just doesn’t seem to care

It’s not that we don’t care. It’s more like we no longer know how to care.

We can’t stay in the house forever. So we’re throwing varying levels of caution to the wind. 

Dr. Fauci sees a COVID surge in fall. 

Some scientists expect carnage. In this worst case scenario, a more deadly than ever variant emerges establishing COVID as America’s #1 cause of death. 

So there’s that. 

Then there’s this. 

The investor perspective. Looking back, then forward. 

U.S. Investors Fared Well During The Height Of COVID

You might be surprised by data from Natixis Investment Managers’ 2021 global survey of individual investors:

  • 76% of North American investors categorize their sentiment as resilient, while 69% expressed confidence rather than fear and 59% feel assured, not stressed. 
  • Going forward, U.S. investors anticipate long-term returns of 17.5%, higher than any other country surveyed. 

During the trauma of a pandemic, most of the rest of the world feels almost as confident as U.S. investors. 

Source: Natixis Investment Managers 

We’re Not Going Back To Lockdowns 

Here in Los Angeles, it barely feels like there’s a pandemic. 

In a city where nearly everyone sported a mask just two months ago, the face coverings are largely off. Public social life has fully resumed. 

But what if Fauci’s right or, worse, the doomsday scenario prevails? 

We’re not going back to lockdown. America isn’t Singapore. Or China. 

There’s simply no appetite for it. 

In late March/early April 2020, 69% of Americans said they’d very likely shelter in place if public health officials recommended it. By mid-October 2020, that number dropped to 49%. And that’s when we were in the thick of things. 

As of January 2022, just 28% reported avoiding public places, such as restaurants, down from 79% in April 2020 and 41% when Omicron hit over the holidays. 

How Should Investors Prepare For A New Wave? 

Do we even need to prepare, given the confidence we apparently feel amid the educated presumption we’re not going back into quarantine? 

U.S. investors cite “volatility” as their top concern going forward. In these times, makes sense. 

If we get a significant wave come fall the market will likely get volatile. 

During downside, a crash, or an economic shock, stay the course and buy the dip works best, particularly for long-term investors. 

However, if you must do something, consider creating a basket of stay-at-home stocks. 

Some are industry leaders. Companies such as Amazon.com (AMZN), which has experienced relatively mild downside in recent months. 

Others, such as Chewy (CHWY), DoorDash (DASH), and Peloton (PTON), haven’t fared so well since the stay-at-home economy reversed. 

Take advantage of the downside to build positions in stalwarts such as Amazon. 

At the same time, consider taking a chance on stay-at-home stocks that have underperformed considerably. 

First, you could be wrong if you’re bearish on some of these beaten down names. 

I like to play a game where a small segment of my portfolio goes against what I think I know. Because sometimes I’m wrong. Plus I’m humble. Try it sometime. On more than one occasion, the results pleasantly surprised me.

You probably hold stuff you wouldn’t buy alone in ETFs and mutual funds anyway. 

Second, stay-at-home stocks could pop if COVID worsens and public health officials start holding daily press conferences again. Whether people ultimately stay home or not, many might curtail at least some behavior. 

Third, expect consolidation. 

It’s only a matter of time before the Amazons and Googles of the world gobble up companies like Chewy, DoorDash, and others. 

Create your own ETF. Fidelity allows investors to build baskets of stocks and trade them as one entity. 

As one small segment inside a larger portfolio strategy, there’s nothing wrong with averaging into a basket of pandemic stocks, especially since many now trade well off of their lockdown highs.  

The Bottom Line: Nobody knows if and when we’ll see another COVID wave. Unless all hell completely breaks loose, don’t expect lockdowns.

However, the market will react to COVID-related concerns. 

If you feel confident about your financial situation, stand pat. 

However, it never hurts to put together a basket of potential bargain (or close to it) stocks, particularly if they stand to benefit from another round of COVID hysteria.

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