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How The Stock Market And Traders Are Still Being Affected By The Pandemic

By Ioannis Rigopoulos. Originally published at ValueWalk.

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At the start of 2022, many economists and analysts predicted difficult trading conditions for the year ahead, on account of high inflation, stagnant economic growth and increases in the cost of living.

For the most part, they were right in their forecasts that 2022 would be a tricky year for those with invested capital.

You also wonder how much of an influence post-pandemic issues are having. While COVID-19 is less of a medical emergency these days, more or less, the ravages that the pandemic inflicted on the economy are still being felt to this day.

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Some trading trends, such as the increased appetite for stocks in the pharma and healthcare industries, have bottomed out, but other patterns of investing behavior continue more than two years after the pandemic hit.

Ethical Trading

Reflecting on the horrors of the pandemic, many traders were left to consider their own ethical stance when it comes to the types of company they are investing in.

Some turned to investment models that enhanced their green and ethical credentials, with the best sustainable ETFs enjoying an uptick in interest – these ensure that all businesses promoted as investment opportunities have been vetted for their environmental and socially responsible practices.

Naysayers believed that the interest in so-called ESG (environmental, social and governance) stocks was merely linked to the bullish market conditions. However, the trend has solidified months and even years down the line.

The appetite for green energy and social responsibility is here to stay, and ESG investors are hopeful that they will enjoy the full benefit of that in the markets.

Next-Gen Tech

An analysis of the best-performing stocks since the start of the pandemic is illuminating.

Some of the companies that feature on the list are self-explanatory – the pharma firm Moderna, which founded one of the first globally approved COVID-19 vaccines, and Etsy, which encouraged customers to design their own personalized facemasks, were just two that have flourished.

However, others have also enjoyed stellar times – including a number of companies that could loosely be described as ‘next-gen tech’ providers.

NVIDIA is best known for producing graphics chips for computers and other devices, but it has also moved into the cloud gaming space – and the success of its GeForce NOW platform saw the firm perform strongly in the closing months of 2021 and into the new year.

The revolution in electric vehicles is yet to really take hold, but those that supply the sector have also enjoyed a decent time of things. Albemarle, one of the world’s leading producers of rechargeable lithium batteries, has signed a creative agreement with the US Department of Energy – needless to say, its stock has performed better than the sector’s baseline.

Working From Home

While the edict for working from home has tailed off in line with the pandemic’s lowered severity, there is still plenty of evidence to suggest that any hybrid model – a couple of days in the office, and the rest working from home – could become the norm for many businesses and industries.

To that end, we can question whether stocks such as Zoom, which enjoyed remarkable booms at the height of the pandemic before dramatically crashing thereafter, still have room to grow.

Supply Chain Management

The pandemic, allied to other global forces, has made it somewhat more difficult to run a business that transcends international borders.

Extra safety checks, and the increased cost of sending large consignments of goods and products overseas, have led many company bosses to become smarter and leaner in their thinking.

Some have opted to ‘overstock’, essentially ordering too much supply of their goods manufactured overseas so that they can order fewer shipments. Another option has been for the ‘regionalization’ of their supply chain, which can range from setting up a ‘hub’ in a foreign country that is closer to the US than where their supplier, typically in Asia, is located. Some have opted to store their products, and manage their logistics, wholly in America.

While in keeping with the performance of pretty much the rest of the stock market, companies such as Union Pacific have seen their value rise out of the ashes of the pandemic. However, it’s their worth during the current bear market – down around 13%, compared to an approximate 24% loss on the Nasdaq – that highlights their worth.

Rise Of The Small Business Owner

According to research, Americans are starting up their own small businesses at a faster rate now than ever before.

A healthy slice of these new firms operate solely online, and so the demand for the necessary IT infrastructure – be it the purchase of domain names, website design, cloud storage, and so on – has enjoyed an uptick in popularity as a result.

GoDaddy, which is the world’s largest retailer of domain names and related products, is another company that performed supremely well during the pandemic and has continued with better-than-average losses during the bear run – it’s down 13.82% in the past six months compared to that Nasdaq average of 24%.

Unemployment, be it temporary or permanent, was one of the key drivers of this phenomenon, but so also has been a shift in mindset – the same study found that millions of Americans actually quit their jobs during the pandemic to follow their dreams of escaping the rat race or make good on an idea they have had for a company of their own.

As has been true in the business world for decades, some of these start-ups will fail and some will thrive – either way, the demand for IT infrastructure remains as strong post-pandemic as it was during it.

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