How COVID-19 Changes Business and Impacts Your Portfolio

by | Dec 29, 2020 | Covid-19

The Impacts of a Global Pandemic

Key Points

  • February – March 2020 saw an unprecedented drawdown of 34% for the S&P 500 in just 23 trading days.
  • Monies flowing into environmental and socially responsible investments are growing at over twice the rate compared to 2019.
  • Businesses – and portfolios – have responded differently to the pandemic: some are losing and others are winning big.
  • After record highs and lows in 2020, much has changed but we’re the same: Cook Wealth is here to guide you on the path to financial freedom and our investment philosophy remains sound.

The US Stock Market in 2020

As we put 2020 firmly in the rear view mirror, nobody would have guessed the challenges, pain, and disruption caused by COVID-19. Hugs, handshakes, and leisure travel were exchanged for lockdown, masks, and the now common act of social distancing.

The stock market was taken by surprise as the virus moved rapidly from a known concern to a global pandemic. February and March saw an unprecedented drawdown of 34% for the S&P 500 in just 23 trading days. The uncertainty was palpable, and many companies and industries were left with few customers and no idea how to plan for the future. Yet, during the downturn and even the shutdown, other companies emerged as new giants, inserting themselves into our daily lives without us even asking. Zoom connected us virtually. Instacart delivered our groceries. And Amazon widened an already dominant influence with even more inventory. We were all forced to take notice of consumer options outside our previous daily routines and habits.

Shifting to E-commerce

US ecommerceE-commerce already stood as a growing force in the area of retail. Yet, few could predict the scale of adoption as in-person shopping nearly ground to a halt. As this chart shows, American consumers shifted their behavior substantially in the midst of the pandemic. Companies that already had a robust online presence snagged new customers at breakneck speed. Brick-and-mortar companies struggled to morph their business models into the new realities caused by COVID-19.

Investors have their eyes on the future

Investor preferences in response to the pandemic shifted more rapidly than ever before. On the issue of ethical and socially responsible investing, the trend has been growing steadily as investors sought to align their values with their investment decisions. COVID-19 has only accelerated that trend. Monies flowing into environmental and socially responsible investments are growing at over twice the rate compared to 2019. In a recent Blackrock study, 57% of participants believed that the pandemic has accelerated structural changes in the energy markets, presenting new opportunities for renewables and alternatives. The pandemic has given investors binoculars into the future and has prompted many to look at where trends will be down the road versus where they stood before COVID-19 invaded our economies and lives.

lasting effects of Covid-19

Like businesses, portfolios haven’t all responded equally to the pandemic either. There is extreme divergence of certain winners and losers claimed by the 2020 pandemic. Companies able to thrive in the work-from-home and shop-from-home trends have grown to reach new consumers.

Portfolio Opportunities

New opportunities pop up as you look towards evolving consumer patterns. It’s important that while you consider new economic realities, you also continually evaluate risks and returns, and maintain diversification. After record highs and lows in 2020, much has changed but we’re the same: Cook Wealth is here to guide you on the path to financial freedom and our investment philosophy remains sound.

 

How does your portfolio stack up in a pandemical world? Request a meeting and we’ll take a look.

 

Sources: 1, 2, 3