Five years ago… Investing in the time of plague?
Thought experiment: What stocks will go up in response to the coronavirus plague?
One idea: Comcast and similar cable TV stocks. If people are stuck at home they won’t mind paying for premium channels and will be less likely to cut the cord.
Second idea: airlines and hotel stocks. “Buy on bad news” is the theory here.
Some ideas from readers in the comments:
- Oil ETFs and/or Exxon/Mobil (XOM)
- Valero (VLO) for diesel fuel
- telephone stocks (Verizon?)
- an index fund of Japanese pharma companies
- carnival cruise stock
- short Boeing and Airbus (BA, EADSY)
Let’s see if my ideas are reliably terrible. Comcast is about flat today (dramatically lower, if adjusted for Bidenflation) than it was five years ago while the S&P 500 has roughly doubled:
How about Hilton (HLT) as a proxy for the hotel industry? It has outperformed the S&P 500.
For airlines, JETS seems to be the ETF that holds U.S. airline stocks. It hasn’t done great.
Reader ideas? XOM and CCL (Carnival cruises) would balance each other out:
Conclusion: it is difficult to beat the index.
Chevron & USO tripled from bottom to top, but you had to stay in until the latest forever war & it was a bumpy ride. There was a lot of thinking about Bide’s green revolution & remote work crushing oil in those days. Here we are, with most top tier companies back to a 5 day commuting.
Not even the best investors can beat the market in the long run. The few that appear to do so are cases of extraordinary luck, not skill.
It does not require a genious to realize that energy stocks are going to rise on long run and that Comcast, founded and run by politically connected lawyers, sucks. It indeed would be very unlucky to loose money in energy ETF on long run, let’s say if cold fusion electric generators became reality or entire world population become boy scouts or hippies. Can beat general market if investing in right market segment.