What a Difference a Few Months Make

5/1/2020

Timing is everything. In business, it is somehow more than everything.

An investment that looks dicey in December can look very attractive in March. And that can’t-miss investment in December can turn sour in a matter of days.
Investing has rarely been more uncertain than it is in the time of the coronavirus. But time-traveling investors are almost certainly going back to December to invest in the technology that allows for videoconferencing among citizens who can’t venture out of their homes or gather in large groups.
Every month, Spectrem surveys affluent investors to determine their attitudes toward investing at that time. One question that are asked each month is what industries they would invest in were they given a large sum of money for that purpose.
Here is how those imaginary investment funds were invested in both December 2019 and April 2020, two entirely different environments for investing due to the outbreak of the global pandemic.
In December, technology was the favorite among investors, with 45 percent of them saying their newfound funds would go into technology investing. Thirty-three percent said they would invest in health care, an industry which could see large-scale changes depending on how the election in November 2020 goes.
Similarly, 23 percent of those surveyed in December would invest in pharmaceuticals, and 19 percent would invest in financial services. Seventeen percent said they would invest in communication. Almost one-quarter said they would not invest even with the extra imaginary funds offered. 
It is noteworthy to see which industries saw an increase in investing interest in the April survey. Those not investing rose to 26.3 percent, as the stock market continued to waver throughout the month of April and the direction it was going in the near future was uncertain, causing some investors to say they would not invest those imaginary funds.
But there was an increase in interest in health care (34.7 percent) and pharmaceuticals (29.4 percent) as those industries are on the front line of caring for the hundreds of thousands of people suffering from the coronavirus. 
The increase in interest in health care and pharmaceutical stocks caused there to be a decrease in interest in technology stocks, down to 37.9 percent, and also a severe drop in interest in investing in financial services (down to 13.9 percent). 
As we learned in Back to the Future II, time traveling to the past in order to take advantage of stock market movement in the months ahead doesn’t always work out. But it does make for interesting conversation.