You Could Have Turned $10,000 Into $73,000 in 9 Months Last Year: Pandemic Hindsight
Hindsight is 2020, as they say (though this past year it was more like Misery/Isolation/Party Pooper is 2020) but if you had $10,000 in an IRA or investment account on April 1st 2020, it’s quite possible you could have been sitting on just over $73,000 as of Christmas Eve (Dec 24, 2020). Yes, a more than 6x (600% gain).
How? Follow me as I walk you through the details of our “thought experiment”…
Parameters:
To prove that… any average investor might have been able to foresee these trades being successful, and you didn’t need to be a financial pro, or subscribe to some obscure stock newsletter.
For discussion’s sake, let’s assume the following:
1. You woke up on April 1st, and realized, along with everyone else, that the COVID-19 pandemic was going to last “an indefinite while”
2. You’re not a finance pro or Wall Street wizard, so you’re using “common sense” as your stock criteria
3. You decided to think about what well-known & popular companies might really surge during an “everyone-stay-at-home-forever kind of environment”
4. You were willing to roll the dice on your conclusions, buying 10 stocks, spending $1,000 for each
5. You promised yourself you wouldn’t sell until the pandemic was OVER. This is key.
(This removes the idea of trying to time the market, or using hindsight to say “I would have sold then”) Because most of us don’t have the discipline to follow that, if we’re honest, do we?
Ok, here are some reasonable things you might have concluded:
· People working remotely will do a lot more video conferences
· With restaurants closed, people will cook more at home
· Since we’re all stuck at home ALL THE TIME…let’s buy stuff for our home, and we HAVE to buy it online, or course — no risking going into stores, which were still closed anyway.
· What should we buy? Well, we need to:
o Eat: more home appliances, cooking equipment, pots & pans,
o Exercise: more equipment, online subscriptions, fitness clothes
o Hang Out: let’s take the money from the vacation we won’t be going on anytime soon, and splurge on new couches/tables/lighting/artwork, you know, stuff
· Wait…so many people losing their jobs…gig economies will thrive, as will side hustles
· What else can I buy online…? Hmmm
So, what happened from April 1st through December 24th? Let’s review the overall market…
As a benchmark, the S&P 500 not only regained EVERY SINGLE CENT IT WENT DOWN…but went up 48%from those dates.
A 48% return is any investor’s dream year. But this year, that wasn’t impressive. In fact, of the 100 stocks I looked at, that would have placed…79th.
What beat it? Well, let’s look at some of your popular guesses that did NOT crack the top 10
FAANG stocks: yes, yes we know — all the media attention went to the trillion dollar unicorns. And they did well, rising anywhere from 37% for Netflix (NFLX) to 114% for Apple (AAPL).
But sorry, not enough to crack our top 10, which all had stock gains of at least 369%.
Travel stocks, you ask? A popular pick this summer, as a “reopening trade”. Many of our favorite hotels, airlines, and especially cruise stocks, plummeted more than 50% in March.
But again, their comeback (not over yet) only ranged from 36% for Southwest (LUV) up to 190% for Avis (CAR).
Very good, but not enough to crack our top 10…
Retail? While the stories of retailers going belly up in 2020 dominated the headlines, those brands that didsurvive performed fabulously: Target up 91%, Nordstrom’s 109%, Macy’s 128%, and the winner, Big Lots, up 226%.
But, still, not enough to crack the top 10…
What about…
Food delivery apps? While HelloFresh & Grubhub roughly doubled, others were mixed
Delivery companies in general? FedEx & UPS solid, up 132% and 89%, respectively
Video conferencing? Zoom up 160%. You thought it would be higher, didn’t you?
Companies that make the Lysol, disinfectants, and toilet paper we all hoarded back in March/April? Kimberly-Clark, Proctor & Gamble? Too big to really move the needle: up 4% & 28% respectively. Even Clorox — CLOROX! Only up 19%
Heck, what about alcoholic beverages? Boston Beer Company (maker of Sam Adams, up 185%. Most others up 50% or less
Website builders: Yes, a great category! We’re all starting our own blogs! Wix up 175%, Shopify a stunning 204%
All great, but none of those make the Top 10….. Ok, so what DID make the top 10? Here we go…
(Editor’s Note: No stocks were considered that weren’t obvious pandemic winners. Tesla, for example, was up 557% during this time period, but it isn’t reasonable to claim the pandemic is the reason. For a full list of stocks that would have made the top 10 that weren’t “obvious”, see the Appendix at the end)
So, here are the Top 10 Pandemic Stock Gains from April 1st through December 24th:
10. 369% Square (SQ) Category: Ecommerce
Of course this makes sense — when restaurants and small businesses were finally able to reopen this summer, usage of contactless, easy-to-pay methods was bound to flourish, and Square is perhaps the most well-known. Paying cash certainly is not popular (too dirty and COVID-infected, right?)
9. 387% Pinterest (PINS) Category: Entertainment / Home Improvement
If we’re all staying home, and we’re all deciding to remodel/remake/revamp our cozy spaces…what better place for inspiration? Save all those pins, so you can make a vision board after your 73 Zoom calls end.
8. 408% Wayfair (W) Category: Buy Stuff For Your House
A company that had never turned a profit until 2020, Wayfair hit the jackpot in 2020, and in hindsight was perfectly positioned for a prolonged pandemic. Alliteration aside, sales skyrocketed like never before.
7. 421% Etsy (ETSY) Category: Buy Customized & Unique Stuff For Your House
In addition to a robust shopping experience, Etsy offers what all other big box online retailers cannot — unique, homemade, hand-crafted items “just for your taste” With millions out of work, many of those people made 2020 the year they finally got their personal Etsy store up & running.
6. 444% Carvana (CVNA) Category: Automotive
Finally. Finally, in 2020, the ability to avoid going to a car dealership and buy your car online became a reality! Because car dealerships were closed. And everyone avoided everyone, not just car dealers like usual.
5. 515% Peloton (PTON) Category: Home Fitness
Yeah…sounds about right. Gyms = closed. Biking or running in a mask trying to cross the street to avoid other people = too hard. For those that didn’t lose their job, finally buying a Peloton made perfect sense.
4. 805% Fiverr (FVRR) Category: The Gig Economy
More than 20 million people lost their jobs in March or April, an astounding, record-breaking wave of newly unemployed people, far surpassing new jobless claims for any week in history. Ever. Many of these people viewed their future job prospects as bleak, but didn’t know how or want to risk starting a whole new business. Enter in the white-collar “gig economy”. Got a skill? People will pay you for it on Fiverr. Expect this trend to continue.
3. 812% Novavax (NVAX) Category: Pharmaceutical VACCINES!!!
Nowhere in this piece have we yet mentioned the coming savior that will end the COVID pandemic — an actual vaccine! Moderna, backed & funded by Operation Warp Speed, got much of the news. So did Pfizer, independently. And AstraZeneca got much coverage, too. But, despite actually delivering a viable vaccine, those 3 were “only” up 311%, 23% and 11%, respectively. (Moderna up 311% is huge…just not top 10 material) Novavax takes the bronze medal.
2. 1097% Overstock (OSTK) Category: Buy Stuff For Your House (category winner)
See above for everything written about Wayfair & Etsy, but with a lower stock price coming out of the March dip. Yes, our silver medal winner was up more than 10x…but it’s still only rose HALF of the #1 stock….
1. 2111% Tupperware (TUP) Category: Home Cooking
In hindsight, OF COURSE this would win. We all cooked at home at prodigious rates during the pandemic, right? If we ordered food delivery, we needed to store leftovers, right? As of March 2020, Tupperware was a faded, beaten up dinosaur, a remnant of the 70’s when your parents used to host parties to sell this in one of the earliest known MLM (multi-level marketing) programs around. Its stock had plummeted from the mid 60’s just 3 years ago, in 2017 … all the way to $1.15 in March. Left for dead on the side of the road and in danger of being delisted, Tupperware made the biggest comeback in 2020, skyrocketing from $1.60 on April 1st all the way up to $35.37 as of Christmas Eve, on record-breaking sales numbers every quarter.
If you were smart enough to think of investing in Tupperware back in the spring, you won 2020.
Hope you enjoyed this piece, and please leave me comments if you’d like to see more articles like this.
Appendix: all stocks looked at that were in excess of 369% gain, but not “obvious” pandemic winners:
PENN Penn National Gaming: 720%
TSLA Tesla 557%
TTD The Trade Desk 404%
RH Restoration Hardware 403%
