Like many of my friends, I’m still positive about the future. As a long-term investor, I’m constantly thinking about buying the future value of a company, which means looking beyond the mess of the moment and onward to better days ahead.
Adversity is often-times a catalyst for innovation and economic/social breakthroughs, whether it’s because of war, a financial crisis, a pandemic, or some other shock to the system. We can emerge stronger from crises and almost always do.
In terms of the investment insights I see in the post-Covid economy, I agree with Zacks Investment who says:
1) Technology’s Increasing Value in a Low-Contact World
“Technology stocks outperformed before, during, and after the crisis. If it was not clear before, many businesses, workers and consumers saw clearly the role technology plays in keeping the economy moving. Whether it’s in the form of remote offices, videoconferencing, online education, entertainment (streaming), online gaming, etc., technology has kept businesses and families connected even during the worst of the crisis. I would expect businesses across all industries to accelerate the implementation of technology into their models, which will mean more demand for infrastructure, software, technology services, and ultimately 5G’s rollout.
2) Companies Should Rethink Their Balance Sheets
Many companies are finding that even having a ‘solid’ balance sheet was not enough to endure several months of basically zero revenue. That’s because many companies had levered-up their balance sheets (taken on debt) in order to secure acquisitions or even to buy back shares. Companies are likely to rethink how they structure balance sheets so that they’re not caught flatfooted if or when economic activity comes to a full stop.
3) Anticipate a Slow Recovery for Leisure and Hospitality
Of the 20.5 million jobs the U.S. economy lost in April, the hardest hit jobs and sectors were those where social distancing and restrictions mattered the most: restaurants, bars, hotels, retail trade. The leisure and hospitality sector lost 7.7 million jobs, while retail trade shed 2.1 million, together accounting for nearly half of the lost jobs. Though these jobs could technically come back easily as restrictions are eased, it may be a slow build as consumers don’t necessarily rush back out.
At the end of the day, there will eventually be a compelling desire, in my view, to put this crisis in the past. The “Roaring Twenties” followed the Spanish flu pandemic of 1918 and 1919 and World War I. My long-term, optimistic view leads me to believe we’ll see a resurgence from the current crisis, too.”
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