With the recent outbreak of Covid-19, it’s hard to tell what the long-term effects will be on the global economy. It is almost certain that global stocks will experience a large drop in the coming weeks and months as this virus spreads. Still, there are ways to protect your portfolio from Covid-19 and hopefully make it big in a lucrative market.
The first thing you should do is diversify your portfolio with different market sectors such as utilities, telecommunications, or even high-risk investments like emerging medical technologies. It is best to buy out-of-the-money put options for these sectors. For stocks in industries associated with Covid-19, you should write call options to keep your portfolio liquid and protect your investments.
Another strategy is to buy a few shares in companies that make antiviral medication. These stocks should experience a significant jump in price once proven that an antiviral drug can contain the Covid-19 pandemic.
Finally, it is also a good idea to own some “blue chips” in an antiviral industry. These are stocks such as Pfizer or GlaxoSmithKline that produce high-quality antivirals. The prices of these stocks will surely go up once they start making new and superior antiviral drugs to contain the Covid-19 virus. You could also invest in a few of the emerging antiviral biotechnology companies like Bioheart, Inc., but be careful as the industry has a tendency to overinvest in certain sectors.
Be sure to diversify your portfolio with different stocks and industries so that you can spread out your risk. Also, remember that, unlike most viruses, there will be no vaccine for Covid-19, so it is safe to buy some pharmaceutical stocks in the coming weeks. The best way to make money is by making educated guesses on what’s going to happen next.
Covid-19: Why Stocks Soared while America Struggled?
For the first time since the Great Depression, America’s wealthiest saw their net worth increase rather than decrease during a recession. Stocks soared, and Americans have seen that growth trickle down to them as well. The idea that stocks would be a safer bet during tough economic times is based on historical trends. It makes sense if you think about it: people want to keep what they earned when times were good, so they buy stocks instead of bonds or real estate. The problem is that stocks can be more volatile than safe investments. But over the past 10 years, stocks have been a much better bet than bonds. Stocks have had more than average growth, while bonds have dramatically underperformed in terms of price.
There was some cause for doubt in the past, but the stock market has been a much safer bet than real estate and bonds.
The top 1% of Americans increased their worth by an average of 12% per year. Meanwhile, the bottom 90% saw their wealth grow by less than 2%. It’s possible that this is a statistical aberration or simply due to demographics: the wealthy are older and have had more time to invest in stocks. Either way, it’s clear that stocks have been a much better investment over the past decade.
Covid-19: How Did Demographics Play a Role?
Some of the reasons for this lies in demographics. The youngest members of the workforce are far less likely to own stocks than their elders because they’re more inexperienced in investing and have fewer resources. Since those people are more likely to be unemployed, they’re also less likely to own stock; people who lose their jobs can also sell off their stock at a loss. This gives stock prices a higher chance of going up and may mean that the 1% might see even further growth in their net worth in the years to come.
All this points to the conclusion that stocks are a better investment than bonds or real estate. The Great Recession may have been bad for most Americans, but it was a boon to the wealthy. Stocks are risky, and sometimes they plunge—but they also have much more potential for growth than other investments.
America – A Beacon of Hope
America was once the bastion of hope and opportunity for frustrated immigrants. Who doesn’t want to come to a land of freedom and prosperity? But these days, during the COVID-19 pandemics, the US has become what one would call an “ugly duckling.” Just look at crime stats, education figures, or health care ratings — they are all bleak or downright horrifying.
This stunning trend has translated into better things for America’s economy. The stock market is on fire, and no sign of slowing down yet. In fact, a new bull market just kicked in last year after the election of Donald Trump.
According to the Financial Times, the American stock market has gained a staggering 3.1 trillion dollars since the beginning of 2009. In fact, the S&P 500 has been on a tear since President Trump took office in January 2017.
This stunning growth in the US stock market has helped mask some of America’s other problems. The country’s economic health can no longer be looked at through one lens. It is so broad and multifaceted that it would take an encyclopedia to contain all of its complex facets.
How the Stock Market Boomed when American Life Soured
So, how did the U.S. stock market boom during the Covid-19 pandemics when American life soured? Here’s one explanation: investors are looking past the bleakness of today to see much brighter days ahead.
The American economy is in better shape than it has been in years. While there are many factors involved, I believe that one of the largest factors is the massive growth in the number of Americans who have dropped out of the workforce. I know the mainstream media makes it sound like this is a bad thing, but it is really good because it means people are going back to school and putting more time and effort into their careers.
For example, more Americans are enrolling in college every year than ever before. The number of college graduates doubled from 4.6 million in 2000 to 9.6 million in 2013. Please visit mighty news for more information.