Investing in the Age of Coronavirus

The stock market continues its roller-coaster ride, previously solid industries disintegrate, and small businesses collapse like a row of dominoes. Have we hit bottom yet, or will the freefall persist as more bad news unfolds?

Is it time to buy, or wait for a further decline? Or sell while equities still have value?

Will the aid package be enough to keep the economy on life support until we can get the COVID-19 pandemic under control?

As with any crisis, any huge upheaval, the survivors will be those who can adapt quickly to the new normal. Companies that already have a robust remote workforce—with secure networks, portable tools, and efficient communication systems—face less disruption than those starting from scratch. Companies that sell online training, conferencing software, security packages, and other work-at-home tools have seen a surge in commerce.

Those in the food supply chain and makers of personal hygiene products are in little danger of failing. The consumer staples sector weathers most storms.

Medical provisions are in high demand. But depending on how long the pandemic lasts, companies just ramping up to make ventilators, masks, and other needed hospital products risk being late to the party and stuck with surplus inventory. We could see a rush to invest in companies that are working on drugs to treat this disease or a vaccine to prevent it. If successful, their stock could soar. Otherwise, not.

Restaurants with a take-out and/or delivery system in place are faring better than those that offer a dine-in experience only. They can move staff from waiting tables to taking phone and online orders or making deliveries.

Creative adjustments and reinvention may be called for. I read a story recently about an event caterer whose business dried up with the pandemic. Instead of folding and wringing her hands over the unfairness of it all, she started advertising a new service around town: cooking for and delivering food to individual families.

Some businesses, by their very nature, don’t lend themselves well to social distancing. While you can prepare tax returns or legal documents without face-to-face contact, it’s hard to cut hair or paint nails and stay six feet away from your customer. If you own a movie theater, you’re closed until further notice.

The travel industry is eroding as airlines are forced to cancel flights, reduce capacity, and stop flying to many international destinations. Cruise ships have become floating Petri dishes, and most voyages for the near future have been canceled. No one wants to book a vacation because we don’t know how long this will last. Airline and cruise stocks have plunged in the past weeks. If you buy their stock now at these depressed prices, how long can you wait for it to recover? Maybe airlines will focus on moving cargo instead of passengers, at least for the time being in order to stay aloft. Perhaps idle cruise ships and empty hotels can be re-purposed as quarantine centers or supplemental hospitals.

Widespread job loss has far-reaching effects. The person who can no longer work in his customer-facing position now has to defer discretionary expenditures. That doesn’t bode well for the contractor who was going to handle his remodeling project. The ban on large gatherings means that a wedding is postponed, which takes away work from the florist, the caterer, the bridal shop owner. When the shop owner has to shut down and lose his revenue stream, he can’t pay his rent, which will leave his landlord in a financial bind.

Spending more time at home these past weeks, I’ve noticed neighbors out walking their dogs, playing with their children, doing things as a family. (With schools out, companies that sell homeschooling materials should see some opportunities.) Gyms are closed, so people are walking or riding bicycles. Perhaps there will be increased demand for home exercise equipment. Maybe there will be a surge in sales of board games, home theaters, and other types of home entertainment.

Animal shelters and rescue groups are suffering because they’re unable to hold public adoption events. But with so many people quarantined at home, some are stepping up to foster homeless animals. Maybe the pet food and supply industry will see a surge as temporary foster parents become attached to their animal companions and decide to adopt.

Those who know how to cook are eating better than those who are used to consuming most meals out. Especially those cooks who are flexible enough to experiment with substitutions when the usual ingredients for their favorite recipes are out of stock. Perhaps there will be a burgeoning interest in cooking classes, and cookbook sales will increase.

As an author, I hope people will rediscover reading during this period of social isolation. That’s a bit of a challenge with libraries and bookstores closed, and Amazon.com classifying book orders as “nonessential,” but there are still audio and e-books available. And while most bookstores aren’t open for browsing right now, many will take orders online or over the phone and ship books to waiting readers.

Whether the stock market is up or down, there are always investment opportunities. Look around you and observe what is trending, what needs must be filled. And try to ignore the hysteria of the crowd. Eventually, this will pass.

What are your thoughts about investing now? I’d love to hear your comments.

Sharon Marchisello is the author of Live Well, Grow Wealth.
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