Increasingly, investors of all ages are having to relearn that, like it or not, “TINA” rules. That’s the acronym for “There Is No Alternative to stocks” if you want a portfolio to grow at least in line with inflation.
But with the hope of decent long-term capital gains from stocks, not to mention dividend income, comes inevitable risk: a risk that has been revealed with the sudden sharp bear market that greeted the COVID-19 epidemic once it gained steam late in March.
Now that the pandemic seems to have entered a renewed and protracted second phase—if, indeed, the first one ever ended—investors may need to pay attention to the “Stay at Home” or “Work from Home” (SAH/WFH henceforth) stock theme that manifested after the initial COVID bear market hit.
Thus far, investors have enjoyed a solid recovery from the initial shock of March. How much depends on the extent to which they embraced the SAH stocks, and avoided those directly in the COVID-19 blast zone: airlines, cruise ships, hotels, office REITs and others directly affected by global lockdowns.
Periodically the latter group rebound on renewed COVID optimism, and are hence dubbed “recovery” stocks. These have so far proven to be short-lived bounces: famously, the young millennial investors who flock to zero-commission trading services like Robinhood have even made money on battered recovery plays, assuming they get in and out nimbly enough.
But the V-shaped recovery expected by optimists seems now more elusive as major American states like Texas and Florida lock down again over a second COVID wave. That bolsters the case for a more long-term stance on SAH stocks like Zoom Video (ZM), DocuSign, Netflix and Teledoc (to name four I own and so far have profited from.)
Don’t forget the big tech companies like Amazon, Apple, Facebook, Google and Microsoft, all of which locked-down consumers rely on to keep a semblance of social interaction going with the outside world.
At least two WFH ETFs are in development to capitalize on this trend, more on which below. But by the time they are available, it may be a bit late: most of the names are obvious ones and can be purchased individually at full-service or discount brokerages. There are 100 (mostly U.S.) stocks in Jim Cramer’s COVID-19 index, which he created soon after the pandemic and bear market began.