Where Would We Be Without Technology Right Now?

In my lifetime, I have experienced multiple terrorist attacks on U.S. soil; a near economic collapse of the entire U.S. financial system; and now, a pandemic.

So far, for me personally, this experience – COVID-19 – has been far worse than the others.

I repeatedly ask myself, however, this question: how much worse would the current state of affairs be without the benefits of technology?

Yes, many, many people will still lose their jobs. Lives, unfortunately, will still be lost. And the socioeconomic carnage this pandemic will leave behind stands to be unfathomable.

Given all of this negativity, though, no matter how you slice it, we are in a much better situation than we would have been had the technological advances of the last 25 years not taken place.

Technology has many critics. People cite privacy concerns. Many workers have seen their jobs become obsolete due to technology. And technology can be hard to understand.

However, it has proven to be valuable during this, what is arguably the most difficult time in our nation’s history.

Two weeks ago, a young lady I know asked my advice about investing in cruise company stocks. The big three – Carnival, Norwegian, and Royal Caribbean – are each down between 70% and 80% of their value. She said that she believed that eventually, people would start going on cruises again, and those stocks would bounce back.

I thought she made a very good argument. I, too, believe that cruise ships will eventually bounce back, although I could not tell you when. But my advice to her at this time was that she should buy technology stocks.

You may have had doubts about investing in technology before. But now, you’d have to be blind not to see how valuable technology has been for us, and will continue to be in the future.

The best judge of how valuable a good, service or tool may be is its usefulness when the you-know-what hits the fan.

Here is a list of companies that are proving to be most valuable during these difficult times:

1. Zoom Video (NASDAQ: ZM) and Ring Central (NYSE: RNG): Companies like Zoom Video have probably saved jobs by enabling employers to continue to conduct business remotely where possible. In a time of social distancing, how would you be able to work without the ability to video conference? Quite frankly, it’d be impossible.

Zoom has also enabled schools and colleges to finish out their semester by shifting              everything to video chat.

The number of people that have filed for unemployment since the beginning of the           COVID-19 crisis is 17,000,000. 17 million. That number is staggering

Just imagine how much larger that number would be without companies like Zoom.

2. Peloton (NASDAQ: PTON):  Companies like Peloton have taken advantage of technology by offering online workout classes, that don’t require an exercise bike or other specialized equipment, for between $15-$17 a month. One of the downsides to staying home all day is that you tend to eat more. A membership to an exercise class through Peloton may be able to help you keep those extra pounds off.

3. Costco (NASDAQ: COST), Walmart (NYSE: WMT), Amazon (NASDAQ: AMZN): Going to Costco, Walmart or any other supermarket has been an absolute nightmare during this crisis. It got so bad that supermarkets had to designate a time when senior citizens could have access to the store without the risk of being trampled by other shoppers.

If you want to get into Costco or Walmart without waiting on line, you have to get there at least two hours before the store opens.

Now, ordering groceries online from the likes of Amazon, Walmart, Costco, Peapod (privately owned) and Fresh Direct (also privately owned) has been no day at the beach either. They are so backed up with orders that it can take up to three weeks to get your order.

Be that as it may, though, online shopping has significantly lowered the traffic at brick and mortar stores.

Without e-commerce, going to the grocery store during these times would be almost impossible, as well as dangerous. Remember, there are almost 350 million people in this country.

4. Netflix (NASDAQ: NFLX), Roku (NASDAQ: ROKU), Disney (NYSE: DIS): Imagine going through this 20 years ago without streaming video! When you’re home all day, seven days a week, you tend to watch a lot of content. How valuable has the ability to watch what you want, when you want, become? Netflix, Roku, Hulu (privately owned), and Disney Plus have been major beneficiaries in this new stay-at-home economy, and will continue to benefit when this is over.

5. Teladoc (NYSE: TDOC): The emergence of telemedicine has really taken off because of companies like Teladoc.  At the moment, you can’t get an appointment with your doctor. Through telemedicine, you can see a doctor without leaving your home.

6. Docusign (NASDAQ: DOCU): We can still sign important documents in this time of social distancing, thanks to companies like Docusign.

7. Facebook (NASDAQ: FB), Twitter (NYSE: TWTR), Pinterest (NYSE: PINS): The social media companies allow you to stay informed (to some degree), connected, and entertained. How would we survive without Facebook, Instagram (owned by Facebook), Twitter, and Pinterest?

Think of how valuable all of the above companies are now…and will continue to be in the future. Got some more to add? Share them in the comments.

Stay safe.

My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

Click the image of the book at left to be taken to its Amazon page.  (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)

 

 

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Guest Post: How Bad Is The Stock Market? It’s “As Good As It Can Get”

Hello, all. Eric here. I hope that everyone is keeping safe. Today we have a guest post from Chris Pascale.

How Bad Is the Stock Market? It’s “As Good As It Can Get”

By: Christopher Pascale

When President Trump took office, the Dow Jones Industrial Average had nearly reached 20,000 points and the common sentiment was that it was time to time the market. In fact, some readers in this Retire by Forty article commented in early 2017 that they would cash out.

Having the superpower of hindsight, we know that the peace of mind that came with selling had cost potential later gains, but so long as they didn’t buy in later they are actually about where they were, meaning that the US Market is about where it was on Inauguration Day when President Trump took office, which many said was as good as it could get.

That’s how bad things are: They are so bad that they are about where they were when we thought they couldn’t get any better.

The Stock Market Today Compared to 3 Years Ago

Using this Dow Jones chart, you can see that on March 30, 2020 the average was over 22,000. When President Trump took office, it had not yet hit 20,000, otherwise thought to be a completely magical number that could perhaps note the beginning of the end of the bull market.

When the average went over 20,000 in 2017, many thought there had to be a correction coming, or even a major crash. Instead, it eclipsed 29,000 before COVID-19 took us all by surprise, “destroying the marriages of the rich”, starving the poor in India, and causing New York Suburbanites to wear facemasks even though the virus is not airborne.

Where Does This Leave Real Investors?

A person I’m close with received $150,000 in 2009 and put it into 3 Fortune 500 stocks. Prior to this crash the account grew to $400,000. Today, the account is worth $280,000.

That means the average annual growth on this account is about 6%. So, in a down time, this account has grown at a much better rate than CDs or bonds could have ever gotten.

For some more perspective – going back to the Dow Jones Chart – had this $150,000 been invested into an S&P 500 Fund when the market was at a previous height in October, 2007, right before the crash that brought us into the Great Recession, the $150,000 would be more than $210,000, bringing an annual return of about 3.2%; still better than what “safe” investments at the bank bring.

Two Conclusions In The Moment

Conclusion No. 1: First, consider those numbers above. Even if you invested into the S&P 500 at the height of the market in 2007, your returns today would average you over 3% if you never reinvested the dividends.

Conclusion No. 2: As Eric sometimes says, it might be time we start going shopping. Some companies are going to go out of business, but others are on sale.

I’m re-reviewing my purchase of Rocky Mountain Chocolate Factory (RMCF). It’s down about 50% since I bought it, but the financials show that cash on hand has remained level over the past 3 years, and they seem to have gotten LEAN with their inventory. However, total revenue and net income have gone down over the past 3 years.

I also find Ford to be interesting. Many news articles claimed that the virus was taking Ford down with it, but when I compared its daily drops to other companies, it looked like there were no material differences. This happened during the auto bailout in 2009, too. Ford didn’t need a bailout, but their stock dropped like a rock simply because they were in the auto business.

I’m not recommending you buy Ford or RMCF. In fact, the only thing I’m really recommending you buy is a little bit of perspective. Because while many feel that things are really bad right now, all I can see by way of the stock market is that it’s a little bit better than when we thought it couldn’t get any better.

Final Conclusion: How Bad Can It Get?

It should be noted that it can get much worse in the short-term. Some projections state that 20,000,000 jobs may be lost by August. If so, those with money in the market are likely to cash out to pay basic expenses – for themselves, or for loved ones with no assets to sell. The result will be share prices dropping as many sellers seek to get as much as they can from few buyers.

I won’t make any guesses about what number the Dow Jones will hit, because it could simply plateau at its current level, which, as already noted, is very good.

Christopher Pascale is an author, accountant and adjunct professor from Long Island. He is the former CFO of Portfolios with Purpose, and is a current member of the IRS’ Office of Appeals.

 

My book, The Stock Market is For Everyone, is a short guide for the beginning, inexperienced investor that is easy to understand and can be put into action immediately.

Click the image of the book at left to be taken to its Amazon page.  (Disclosure: As a participant in the Amazon Services LLC Associates Program, I earn a small commission on each sale generated through these links.)