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COVID and Its Impact on Business and the Market and YOUR Investments

It’s no secret that COVID-19 has had a significant impact on business and the markets worldwide since it began in March 2020.  Though the disease continues to take twists and turns, the economic crisis and impact on business and the markets that Covid brought seems to be nearing the end and it often feels as though we are reaching the light at the end of the tunnel.  Nonetheless and despite the gradual re-opening of the country, the effects of COVID-19 remain incredibly present and visible even over a year and a half later. The virus has impacted businesses and as well as the market and economy, thus changing the way people invest and altering the stock market.

February 19, 2020 marked stock market peak that occurred right before the outbreak of COVID-19 triggered a large fall in share prices. The first and most noticeable effect on the stock market caused by the virus was this initial plunge: between January 23 and March 6, the NASDAQ-100 fell 7.4%, followed by another 12.4% over the next two weeks. The S&P 500 followed a similar trend: it fell 10.6% between late January and March and an additional 14.9% in early March when the lockdowns and closures began. When people began to lose their jobs as the result of enforcement of lockdowns, spending ultimately decreased and almost every sector of the market experienced a fall in the face of the economic standstill.

How Various Sectors and Markets Managed During COVID’s Peak

Large Corporations That Took Large Hits

Businesses that were particularly the most negatively impacted by covid and the the lockdowns were the ones that relied primarily on their sales and customers at their brick-and-mortar locations, such as restaurants and activity centers (bowling alleys, movie theaters, etc). 

Although covid and its impact on business that was smaller in size was most obvious, major corporations were not immune from the effects that the virus had on the market. Companies that were already struggling before 2020 were in the worst position and many filed for bankruptcy. Among some of those who went bankrupt as the result of COVID were J. Crew, Tailored Brands, Hertz Global Holdings, J.C. Penney Co., Whiting Petroleum Corp., Chesapeake Energy Corp., and GNC (General Nutrition Center) Holdings. 

Home décor aficionados may also be upset to hear that Pier 1 Imports also declared bankruptcy and has shuttered all of its stores across the country. The home goods store technically filed for bankruptcy pre-COVID after losing customers to online competitors like Amazon and Wayfair, but COVID forced the company to close up even faster rather than waiting it out and seeing if there was any way to recover. Purchasing wicker side tables and throw pillows were the last way people would be spending their money during an economic crisis, and the fact that its online competitors already had the lead in customer preference did not put Pier 1 in a good place in early 2020.  Fashionistas, and New Yorkers especially, sadly watched Century 21 close all of its doors after filing for bankruptcy in September of 2020. After the announcement, the stores began to close all locations and proceed with liquidation, while offering tremendous discounts to get rid of its inventory in the process. 

 

The Technology Industry: Large Advancements and Big Changes 

One industry that was able to avoid the stock market’s decline trend was the technology sector. As the world went through closures of physical business locations for the temporary, though quite lengthy, lockdowns that varied in degree depending on the locality, companies began to adopt work-from-home models and began developing ways to keep their companies above the water by figuring out how to make their goods and services accessible to anyone, anywhere. Technology provided ways for people to communicate, shop, and work from one’s own home. Although technology has long aided society in a multitude of ways, the world almost had no choice but to heavily rely on it during the closure period. As this shift to an almost fully digital society took place, tech stocks surged and reached high levels of success. While technology services such as Zoom and Amazon were already successful and popular before COVID, they experienced an outstanding about of success as a result of the virus. Zoom stock went up almost 500% since the beginning of 2020 since the videoconference service became the primary method of schooling and work meetings for many. Amazon stock soared 76% in 2020 according to data from S&P Global Market Intelligence. Amazon’s sales climbed 37% year over year to $96.1 billion in the third quarter. Its net income, meanwhile, nearly tripled to $2.1 billion. Amazon owes this success to the detriment of brick-and-mortar retail stores, many of which closed or remained stagnant during the lockdowns. People began to defer to e-commerce to fulfil their needs, and Amazon seemed to be the number one choice among the general public. Perhaps it is because of their quick shipping, Prime membership opportunities, low/competitive prices, and good refund and return policies. 

Despite What One Would Think, Health Stock Experienced a Steep Decline

One would think that health stock values would soar during a widespread illness crisis, but this was not the case in 2020. While there was an increased need for hospitals for COVID patients, the medicine business declined as facilities had to conserve their resources for more serious, less profitable procedures. As an example, elective surgeries fell by 55% as health professionals advised against visiting hospitals for non-emergency reasons during the time. Additionally, many avoided hospitals during the peak out of fear of contracting COVID from ill patients. But now that infection rates are evening out and declining, health stocks are beginning to see some recovery. A rise in stock could be just ahead, as there remains a backup of patients due for and wanting their elective procedures and visits that they have been putting off. 

 

Investing in the Market: COVID’s Role in the Rise in New Investors

The beginning of 2020 not only brought stay-at-home orders, but also increased market volatility and zero commission fees across trading platforms which brought a surge in activity and an increase in the number of first-time traders. Because of the decrease in stock price, the market became accessible to more individuals. Additionally, now that sports events were cancelled, avid sports betters turned to stock trading as a replacement. As stocks declined, new and young investors began to download and familiarize themselves with the Robinhood app. Robinhood is a free-trading app that allows investors to trade stocks, options, exchange-traded funds and cryptocurrency without paying commissions or fees. This “no commissions or frees” tagline is likely what draws investors to the platform. Users of this app are pleased by its simplicity and the ability to start trading commission and fee-free in seconds and from anywhere in the world. Robinhood currently has around 18 million users and is valued at $20 billion and is holding its own among its older competitors, such as E-Trade, TD Ameritrade, and Charles Schwab. 

 

What is On the Horizon?

With the crisis subsiding but still leaving society with many questions and concerns about what will happen next, it can be difficult to precisely predict the long-term future of the stock market and the economy. Based on general observations of the gradual shift to a digital society, we can expect to see that this trend will only continue as new technologies continue to be developed to assist individuals in their everyday lives. There are also a variety of other factors we can look at in forming our predictions as well, which are discussed in detail on one of our recent podcasts. In this podcast, our interviewee, Cynthia Ruiz, predicts how COVID affects 2021 investments and markets. Cynthia holds the powerful role of President for LACERS (Los Angeles City Employee Retirement System) where she oversees a multibillion-dollar pension portfolio. But that is just one of her many roles. Cynthia is also a Professor, Executive Coach, Best Selling Author, Inspirational Speaker and Leadership Expert. This interview will give a greater understanding on how a global crisis impacts various markets and sources of investment.

In Uncertain Times Such as These, Your Investments Matter

We have been through a year like no other. Challenging and life changing in a myriad of ways.  We learned that zoom is actually a noun and a verb and something we never thought possible became common practice.  Parents like me found ourselves navigating between zoom work meetings and zoom school assignments with a simple click to change screens. At first it seemed unmanageable, overwhelming but then we got into a rhythm and many of us found that working at home wasn’t so bad. Now that school has resumed in person, we can begin to focus on other things. Now as the worst appears to be behind us we are able to look forward with renewed energy and having learned a few things about resiliency both emotionally and financially it feels like the right time to re-focus on our investments and our ensure our portfolio recoveries.

 

How We Can Help

As a securities and anti-trust class action attorney, in practice for over a decade, my goal is to assist you with all your portfolio recoveries including claims filing, tax recoveries, class action claims, derivative claims whistleblower claims and more.  My podcast will provide a way to connect with my legal and investment community and assist both my private clients as well as my public funds and union clients in providing up-to date- information on their portfolio recoveries. I want to assure you that while we may not have seen one another in person these past months, I have been working diligently on your behalf to continue to provide our state of the art services and personal attention that I take pride in and know is the key to an authentic and long lasting relationship between me us. Let’s continue the work we have been doing with the knowledge that we can get through tough times and come out stronger and more financially robust. 

For more information on my ways to join cases and increase your portfolio and shareholder recoveries read my blogs and listen to my podcast.  Providing information and creative ways to ensure my clients recover all monies due to them in the simplest ways is my overarching goal.

 

 


As a securities class action attorney, my goal is to assist you in maximizing claim recoveries related to your investment portfolio, including direct claims, class action claims, class action settlement claims, derivative claims, tax recovery claims, and where appropriate to pursue whistleblower claims and more that help to protect the integrity of the securities markets.  My blog provides the legal and investment community to which my private investor, public fund, and union fund clients belong, with up-to date- information relevant to their investment portfolios. I want to assure my clients that while we may not have seen one another in person these past months, I have been working diligently on your behalf to continue to provide our practice leading services while maintaining my high level of personal attention that I believe is essential to an authentic and long lasting relationship with my clients. Let’s continue the work we have been doing with the knowledge that we can get through tough times and come out stronger and more financially robust. 

 

For more information on ways to join cases and to increase your investment portfolio recoveries read my blogs and listen to my podcast.  Providing information and creative ways to ensure my clients recover all monies due to them in the simplest ways is my overarching goal.

 

This blog is sponsored by its creator, Atara Twersky, Esq. The blog may be considered a form of attorney advertising in accordance with New York’s Rules of Professional Conduct.

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