Investing in a COVID Market: Part 2 - a podcast by Ben Jackson

Our economy is going through lots of change right now as this virus creates significant disruption for people and businesses. Small businesses are really hurting as forced closures and stay at home orders have made it hard for them to stay afloat. This same thing is happening to really large companies. Bankruptcy filings by companies like JCrew, Neiman Marcus, JC Penny, Hertz Rental Cars and Gold’s Gym show that well known brands are not immune to the impacts of the virus and show how our behaviors around eating, shopping, and working out have changed…maybe forever.
Certain industries are really getting hit hard. But how do we know what those industries are with data? Well one report that gets lots of attention is the Jobs Report which you’ve probably seen in the news lately telling the bad news around unemployment. Millions of people have lost their jobs or been furloughed because of the virus. But within that report are some really important numbers and indexes that tell us a lot. One of those is the diffusion index which shows which industries are gaining or losing jobs. There are 258 total industries tracked by the index and only 7 industries experienced job growth. Yikes! To put it in numeric terms, in February the diffusion index was 53 but in May it is 4. And that is out of 100 where bigger numbers are good.
This shows just how widespread the job loss and impacts are. So this index can help us understand in the short term what industries to avoid potentially investing in like travel (so the airlines) leisure and hospitality companies (which are food services, hotels and even online booking sites), traditional retail stores, transportation, construction and the gaming industry like casinos. It all really makes sense when you think about it.
So what industries are still doing well, even thriving in this environment and what themes or narratives can we create to help us invest?  Here are four:
1. Ecommerce 
2. Consumer Staples
3. Our New Normal at Home 
4. Healthcare 
The episode continues by discussing how we check our work, ways to buy these themes, a discussion on cash positions in our portfolio and dollar cost averaging.


---

Send in a voice message: https://anchor.fm/calmcash/message

Further episodes of Calm Cash

Further podcasts by Ben Jackson

Website of Ben Jackson