As an experienced investor, I am less worried about the money I am currently losing in the stock market than I am about making sure I am ready to capture big wins in the impending rebound. I have lived and invested through blips, corrections, recessions and crashes before; my long term holdings will, for the most part, come back and, as a portfolio, will end up pretty much where they would have been in few years’ time.
What would be extremely unfortunate in my view is missing out on the wave that we all know is coming. There are relatively few opportunities during one’s investing lifetime during which he or she can make exponential gains, and we are about to see one of those moments. With every extreme blow, whether prompted by internal factors or, as in this case, a catastrophic external force, there is always a rebound, and often a very high, short-term bounce. The question, of course, is when the volatility will end, but historic indicators suggest that, while markets will likely remain temperamental for the next six to twelve months, as things settle back down, we could see a strong, overall period of growth.
To be ready for the opportunities, it is necessary to think about which industries are most likely to not only survive but thrive past the Covid-era, which by all accounts is unlike anything we have experienced in modern history. The entire globe has been impacted by the same force, at the same time and in much the same way. There is no follow-the-leader cycle of years, but rather only days, as one nation plummeted into despair after the other. Similarly, we will all climb out the other side at nearly the same time. Some nations and industries will take longer to get back on their feet, but there are some that will sprint out of the bunkers at full speed. As is usual, the ones we can surely expect to be leaders in the upcoming rebound are those with innovations that helped consumers and businesses cope with shock in the first place.
The table below is a summary of current industry winners and losers, as well as the ones to watch closely in the future, as identified by several experts whose articles are cited below. Starting on the left, Current Losers are segmented between those industries that will, with the exception of a few key players, likely remain in decline and those that will likely come back when the dust settles. Current Winners are separated into those that will likely contract at least somewhat after the current, inflated demand subsides and those that will keep winning long after we have a proper Coronavirus vaccine. Lastly, on the far right are the Ones to Watch – the industries and technologies that are anticipated to play a key role in our new, post-Covid world.
Do note that the segmentations within the losers and winners categories are, for the most part, based on my own experience and knowledge of the industries along with a healthy dose of humble opinion. My fund, ATO Ventures, focuses on early stage technology startups in Digital Health, Fitness & Wellness as well as Digital Media & Entertainment, two industries that were already growing at double-digit CAGR in several sectors, and are now seeing a lot of strong Covid-economy wins. For that, I am grateful and, while I cannot tell you where to invest your capital, I will be placing my bets on industries and segments that fall in the two far-right columns.
Jennifer P. Hopp is an angel investor and the Managing Partner for ATO Ventures, an early stage venture capital fund focused on technology companies in Health, Fitness & Wellness and Digital Media & Entertainment. Based in Puerto Rico, ATO Ventures mainly backs pre-launch startups located in the USA and LATAM using a risk-mitigating, Market Validation Testing strategy. To find out more about investing with ATO Ventures, message Jennifer on LinkedIn (@JenniferPHopp) or Instagram (@Hopp.vc)
Summary of Source Articles
1. “Coronavirus Economic Impact: Market Winners and Losers of COVID-19”
Olga Andrienko, March 26, 2020
If search traffic is any indication, Zoom is definitely one of the winners. Search volume increased 22% from January to February and is projected to increase by 108% from February to March. Zoom stock skyrocketed from $108 on March 16 to $162 on March 23. Other remote working platforms such as Skype and Slack are also faring well, with the latter expected to jump 71% from February to March. Other winners by search volume are home fitness equipment, tv and movie streaming platforms, food delivery services, cleaning supplies and food wholesalers. Losers, not surprisingly are airlines, hotels and events, including conferences, festivals and concerts.
This article segmented industries into Winners, Losers and In-betweeners. Winners include ecommerce marketplaces, pharma, entertainment platforms and delivery services. The losers, whose leaders “will need a Herculean effort to pull them through the crisis,” include airlines, cruise ships, oil & gas, traditional retail and events, including professional sports. The in-betweeners are ones Wade thinks could go either way depending on how the companies react. These include banking, healthcare, manufacturing and education.
3. “COVID – 19 Will Fuel the Next Wave of Innovation”
Hamza Mudassir, March 16, 2020
Black swan events, such as economic recessions and pandemics, change the trajectory of governments, economies and businesses — altering the course of history. SARS pandemic of 2002-2004 catalyzed the meteoric growth of a then-small ecommerce company, Ali Baba, and helped establish it at the forefront of retail in Asia. This growth was fueled by underlying anxiety around traveling and human contact, similar to what we see today with Covid-19. The financial crisis of 2008 also produced its own disruptive side effects. Airbnb and Uber shot up in popularity across the west as the subprime crisis meant lower savings and income for the masses. With Covid-19, we are already seeing early signs of a shift in how consumers and businesses behave. Remote working is being encouraged by tech and non-tech companies alike, airline profitability is getting impacted by low seat occupancy, supply chains are getting disrupted globally and retail stores are running out of goods.
Yet, Mudassir points to strong evidence that “both pandemics and recessions are accelerants to innovation.” The crisis has exposed deep problems with supply chain logistics that can potentially be solved with “technologies such as 5G, robotics, IoT and blockchain” as well as self-driving cars and delivery drones at the consumer end. Geo tracking and smart cities could also help avoid many of the problems we’ve had tracking the Covid-19 outbreak.
4.“Expert Insight: Four long-term retail trends in post-COVID-19 world”
Lynn Gonsior and Bill Chidley, March 27, 2020
Retailers are incredibly resilient. Despite everything that’s been thrown at the retail world it has the ingenuity and perseverance to rise above and emerge stronger. Here are four Long-Term Retail Trends in Post-COVID-19 World: 1) When this is over, there will be an expectation for authenticity. Consumers will reward brands that “do the right thing” during this crisis; 2) There will be a demand for new experiences. Brands should be ready to deliver experiences that are optimistic, entertaining, and fresh; 3) Consumers will have a heightened sensitivity to our mutual vulnerability and the role we play in keeping everyone healthy. Environments will have an ongoing expectation to be clean and simple, and we may have a different sense of our personal space; 4) Social distancing will drive more consumers to digital platforms. People who never once used a service like BOPIS, DoorDash, etc. will adopt new behaviors during this pandemic.
5. “Corporate winners and losers in the new coronavirus economy”
AFP-JIJI, March 22, 2020
Other sectors that are thriving through this pandemic are: 1) E-commerce Giants – Large online retailers have seen a surge in orders as self-isolating or home-working consumers turn to massive distribution and delivery networks to provide daily essentials; 2) Streaming activity jumped by 20 percent over the weekend of March 14 and 15, according to Bloomberg News. On the other hand, traditional cinema chains are facing an unprecedented drop in demand. Some have temporarily closed their doors to help contain the virus’s spread 3) Private Jets – U.S.-based Paramount Business Jets has seen inquiries go “through the roof,” CEO Richard Zaher said. Queries have risen 400 percent and bookings are up 20 to 25 percent; 4) Home workouts – Shares in U.S. home gym equipment maker Peloton surge as investors bet on rising demand for its stationary bikes and memberships to online workout sessions; 4) Teleconference – Demand for technology that enables online group meetings, chats and collaborations has spiked. At the same time, real world gatherings from sporting events to business conferences have been postponed or canceled.
6. “Online mental health services in China during the COVID-19 outbreak”
Shuai Liu; Lulu Yang; Chenxi Zhang; Yu-Tao Xiang; Zhongchun Liu; Shaohua Hu; Bin Zhang, February 18, 2020
Online psychological counselling services (eg, WeChat-based resources) have been widely established by mental health professionals in medical institutions, universities, and academic societies throughout all 31 provinces, municipalities, and autonomous regions in mainland China, which provide free 24-h services on all days of the week. Online psychological self-help intervention systems, including online cognitive behavioural therapy for depression, anxiety, and insomnia have also been developed. In addition, several artificial intelligence (AI) programmes have been put in use as interventions for psychological crises during the epidemic. For example, individuals at risk of suicide can be recognised by the AI programme Tree Holes Rescue, by monitoring and analysing messages posted on Weibo, and alerting designated volunteers to act accordingly.
In general, online mental health services being used for the COVID-19 epidemic are facilitating the development of Chinese public emergency interventions, and eventually could improve the quality and effectiveness of emergency interventions.
7. “Market Trends and D2C Opportunities in the COVID-19 Landscape”
Stephanie Abe, March 17, 2020
These are the top consumer buying behaviors and market trends you should be aware of as you’re swiftly adapting your direct-to-consumer (D2C) growth marketing programs to survive — and better yet — thrive. Luxury items and non-essential products such as clothing, jewelry, home decor and gadgets are taking a hit while items deemed essential such as food and cleaning supplies are in high demand. Retailers, including e-commerce sites, that cannot meet this demand need to focus on response via excellent customer service lest they damage their reputation long term.
————– table repeated in htlm for download——–
Summary of the Losers, Winners and
“Ones to Watch” (Read: Where I’m Placing My Bets.)
Ones to Watch
(The Final Blow)
Will Come Back
(Can’t Live Without ‘Em)
Likely to Contract
(Going Back to Old Ways)
Will Keep Winning
(New Way of Life)
New World Beasts (b/c I’m tired of “unicorns”)
Brick & Mortar Retail2,4
– the shift to experiences will be accelerated
– already in decline, the end of the big screen is in sight
– only the strongest will survive
Oil and Gas2
– will we finally wean ourselves? Yeah, probably not —->>>
Health / MD Offices & Clinics2
Oil and Gas2
Home Fitness Equipment & Apps1,5
Chat Services for Business1,3
Cloud Gaming Platforms1,2
General Logistics / Delivery2,3
Grocery & Restaurant Delivery1, 2, 4
Online Mental Health Support3,6
TV & Video Streaming Platforms1,2,5
Video Conferencing & Calling Platforms1,2,35