Change has been one of the only constants for investors over the past two years of the COVID-19 pandemic.
Today marks the second anniversary of the announcement of the COVID-19 pandemic by the World Health Organization. Lockdowns of businesses and economies around the world soon followed. Economic growth has stalled.
According to the National Bureau of Economic Research, in February 2020, the US economy entered a recession that lasted until April of that year.
Stock markets around the world took it hard.
The Dow Jones Industrial Average fell nearly 35% from mid-February to March 16 due to the spread of infections and deaths from COVID-19. Even such often Teflon stocks as Apple were not spared – from mid-February to mid-March 2020, they fell by 30%.
There are 452 million cases of COVID-19 worldwide and more than 6 million deaths, according to the WHO.
As many major companies prepare to return to offices this spring, and the economy and stocks rebound thanks to Pfizer and Moderna’s COVID-19 vaccines and boosters, the impact of the pandemic on lives and markets remains in focus.
Here are three things the pandemic has changed for investors.
1. Rise of the retail investor
Armed with more free time amid office closures and layoffs, as well as new stimulus from Uncle Sam, the market has welcomed a host of new retail investors.
Newcomers to the market gravitated to what they knew in their daily lives, buying up shares in video game retailer GameStop and movie theater chain AMC.
The frenetic trading activity powered by new brokerage platforms such as Robinhood (which went public in July 2021) ultimately helped create the Reddit-fueled meme stock movement that is still strong in the markets today.
Think about it to get an idea of the strength of this new group of investors.
Shares of GameStop (GME) opened at $5.80 on January 6, 2020, reflecting years of slow sales growth and management leaving. The stock reached an all-time high of $483 on January 25, 2001. Today, GameStop shares are trading at around $100.
The story goes on
2. Rampant inflation
Due to the shutdown of the economy and business during the pandemic, supply chains have practically stopped working. This resulted in goods being stuck on ships and retailers’ shelves empty. Semiconductors were in short supply.
Once supply chain bottlenecks have begun to loosen a little, shipping prices have skyrocketed as businesses want to offload their goods.
In turn, these higher costs were passed on to consumers at breakneck speed.
Consumer prices rose 7% in 2021, the biggest increase in 12 months since June 1982.
There is no easing in this sizzling inflationary backdrop as supply chains continue to grapple with the pandemic and Russia’s war on Ukraine has prompted sanctions from the West.
The February consumer price index (CPI) soared by 7.9% compared to last year. Economists tell Yahoo Finance Live that the consumer price index could rise into double digits in the coming months as gas prices surged due to the war overseas.
3. Home buying boom
The pandemic has caused a complete rethinking on the part of people when it comes to work-life balance. Now their home truly counts as their castle with an office conference room. People fled the cramped cities, had babies with the pandemic, and opted for more spacious and affordable homes in the suburbs.
In 2021, a total of 13.2 million new and existing homes were sold in America. For those not buying new homes, the pandemic has unleashed a wave of renovations to existing homes.
Home improvement retailers Home Depot (HD) and Lowe’s (LOW) were big beneficiaries, with stocks up 111% and 40%, respectively, over the past two years.
Brian Sozzi is the editor-in-chief and Lead at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and beyond LinkedIn.
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