November 26, 2021
In a Nutshell: Nearly every industry was affected by the COVID19 virus. Businesses shut down and people turned to the stock market for other sources of income. After the economy reopened, money started to circulate again. But, the post-pandemic economy looks like inflation for some, and uncertainty is creeping back into the picture with the rise of the delta variant. On top of this, the delta variant put a spin on reopening. With all this up, down, and all around stock market action, everyone can use a little help in making educated investment decisions. So, let’s dig in.
Well, folks, we thought we reached the light at the end of the tunnel, but it seems we aren’t quite out of the woods yet. While 2020 was a whirlwind of troubles, the growth in new COVID cases is dampening our hopes of a smooth reopening. When reevaluating your finances and goals, it’s important to remember that we are still in… dare we say it, unprecedented times. Our economy is reopening, and the government, as well as its people, are doing their best to steady the boat. So, when you’re investing in the post-pandemic economy, what should you consider?
How Did COVID Affect the Stock Market in 2020?
First, you need to understand how COVID affected the stock market. Nearly every industry you can imagine was affected by the virus, and we are still feeling the repercussions of that. Shutdowns in all the major supply chains meant that prices skyrocketed, while businesses were no longer able to deliver results and shut their doors. Not only could business owners not afford to stay afloat, but neither could their customers. This incredible spike in unemployment drove people online to search for other lines of income. Employment is ramping back up, but we haven’t totally turned the page from the pandemic quite yet. Investing in the stock market suddenly appeared much more attractive as Youtube gurus (actually, here’s a good one) and meme stocks began to fill up our feeds.
How Does COVID Affect the Market Today?
This increase in retail investors and uncertainty of the future brought unfamiliar volatility to stocks across the board. Now, with the economy reopening, both corporations and consumers alike are beginning to move money around again. Due to the bailouts and stimulus packages, inflation has started to rear its ugly head! It’s important to understand how this plays into the market because the fear of further inflation holds back many industries and stocks. The Federal Reserve oversees and makes the necessary adjustments to monetary policy in the United States, but even they are unable to reverse trends. If you want to understand investor sentiments regarding the market as a whole, listen to economists’ thoughts with each press release from the Fed.
How Do I Invest for the Future after COVID?
When planning your entries and exits for stocks in the future, it’s important to do your due diligence. This means studying your target stocks, researching earnings reports, press releases, market indicators, and much more. With our economy still in a “re-opening” phase, this puts an interesting spin on each industry. Some are bogged down by supply chain issues (wood, steel, computer hardware), while others are emerging better than ever before. Comparing the pre-pandemic U.S. to today’s economy is a great way to hone in on industries with strong growth and potential. For example, telehealth was the medical care of the future, until social distancing and stay-at-home orders expedited it to the medical care of today. Even supply chain manufacturers will be booming once they can keep up with the current demand.
So, invest smartly and invest safely. But, to make educated decisions in a post-pandemic finance world requires critical thinking and detail-oriented research. Not everyone has the time to do this, which is where Front comes in (*hint hint*). If you want a little boost, check out our free app to keep up with the markets and see what others are investing in. With an informed approach to investing, you can take advantage of the volatility and growth that is defining our market in 2021.