Watch: Buying and Selling ETFs
Cramer—host of CNBC’s Mad Money TV show—deserves credit for coming up with the FANG acronym (Facebook, Amazon, Netflix and Google). FANG has made money for anyone who got in within a reasonable timeframe, and some ETFs filched or enhanced the idea.
Based on this chart, I’d say Cramer’s COVID-19 index has thus far earned its keep and kept investors out of stocks hardest hit by the virus. The 100 COVID-19 stocks include more than just WFH and FANG stocks: they also include pharma and biotech stocks working on a COVID-19 vaccine: Abbott Laboratories, Eli Lilly, Gilead Sciences, Johnson & Johnson, Moderna, Pfizer and Regeneron Pharmaceuticals.
Since we all need to eat, and cleanliness is paramount in the COVID age, there are also consumer staple giants like Campbell Soup Company, Clorox, Colgate-Palmolive, General Mills, Kellogg, PepsiCo and Procter & Gamble.
Rising dependence on home-based technology is why the index includes
cloud and cybersecurity names like Adobe, Coupa Software, CrowdStrike, Salesforce and ZScaler. With sports and cinemas shut down, home entertainment is important, hence the inclusion of makers of streaming services from Netflix, Amazon Prime Video, Apple’s new Apple TV+ streaming services, or the Spotify music and podcasting service. It also includes video game makers like Electronic Arts and Take-Two Interactive.
At some point we need to exercise—hence Peloton, makers of socially connected stationary bicycles and streamed workouts—or order food through takeout services like Chipotle or Domino’s Pizza. Those seeking to market crafts created by home-based businesses will use services like Etsy.
Notice there are few Canadian names in the list, apart from Shopify.
Using a “barbell” strategy
Should you consider playing the recovery and taking a flyer on the hardest-hit names like airlines and cruise lines? I don’t have the stomach for such risks myself, although Cramer has suggested a “barbell” strategy consisting of balancing both the COVID and recovery stocks.