In the stock market, there is what have stocks done lately attitude. Sometimes it is relatively easy to see or catch a wave and sometimes you need to sit back and wait.
In an article by Matt Phillips of the New York Times News Service, when the pandemic hit and governments asked people to stay home or socially distance themselves, some companies automatically were at a disadvantage and some companies benefited. The companies which benefited included Zoom Video Communications and Peloton Interactive Inc. Last year when people were at home, the companies only seemed to go up, but since the offices have or are opening up, the shares have decreased. The growth of the companies unless there is a shut down again have likely seen their best. The companies are still viable, just not growth companies.
The companies which did not benefit from the government’s health related actions are now performing better and they include airlines, live event companies, and commercial real estate firms.
When Zoom and Peloton was where the growth was the stocks increased over 400% however this year the stocks are down 22% and 64% respectively this year. It depends when you bought.
Eric Mintz, co-manager of the Eagle Mid Cap Growth Fund owned $136 million worth of Pelotron and has sold his stake. He is buying companies tied to infrastructure, home improvement, and health care.
Linking to dividend paying stocks, Zoom became a household name for video conferencing although Cisco’s Webex does the same thing. When something changes we all tied to find the phrase which helps us go through the changes. In the case of stay at home, people used Webex and Zoom but the phrase Zoom sounded catchier. Many governments went with Webex and smaller companies went with Zoom. If you invest in growth companies you need to stay in tune with popular expressions, if you do not you will tend to be late to the party. If you do not, you should tend to stick to large profitable companies who have people in the company trying to keep up with popular expressions. Buy for the long term with a dividend and you do not have to worry about what is hot and not, just what is good for you.
There are more questions than answers, till the next time – to raising questions.