Epidemor stocks have seen prices rise and fall rapidly.
The rising climate of the stock market has led investors to become financially strapped as they benefit from the work of local companies.
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Demand for stock has skyrocketed, reflecting consumer enthusiasm for products like Peloton ((PTON) - Netflix ((NFLX) - Roku ((ROKU) - and Zoom (ZOOM) as people stay at home watching movies, chatting with their friends and members. family on video calls and exercise at home instead of gyms.
Investor hope and enthusiasm were no longer on the charts in the second half of 2021 and even in 2022 although incomes were declining as work from the home stock market was no longer desirable when the economy reopened and some people returned to office.
Several of these stocks have declined recently as market volatility rises and consumers change their interests and spend money traveling, eating in restaurants and attending concerts and movies.
The current year loss of these stocks until May 13 is eye-opening. Shopify (((SHOP)) - Decreased by 70.47.07% while Zoom lost by 48.53% and DocuSign ((DOCU) - Decreased by 49.58%.
"Unfortunately most of these epidemics, they have been able to advance the need for many years for products to be in the right place at the right time and to reach higher prices," Art Hogan, market strategist B Riley Financial, told. Road. "Now we see them returning to earth immediately."
Good Products vs Good Investments
Even on January 21, the first three weeks of trading in 2022, many of these stocks reported huge losses. Shopify fell 35.3% while Netflix fell 33.5%. Coinbase ((COIN)) has seen its stock price plummet by 23.5%, but its annual losses so far are 72.97%.
These stocks are driven by "all the money invested in the financial markets in response to the epidemic," Robert Johnson, a finance professor at Creighton University, told.
"This is what has led to incidents of meme stocks, epidemic shares and bull markets in cryptocurrencies," he said.
Investors often fail to recognize that good products such as Peloton bikes do not necessarily mean that they are a good investment.
"I'm a big Peloton user," Johnson said. “I have encouraged others to consider buying a bicycle and a printing press. But, I have never encouraged anyone to buy stock. The business economy did not just justify the high rate. ”
The risk of owning certain shares is high, especially if there is already a lot of competition in the industry. Peloton did not indicate that "it will be able to make a good profit," he said. “People love the growth of income and fail to realize that strong economic growth does not mean that it is profitable. What good is it for a company to sell a product for $ 20 when it costs $ 22 to produce and deliver it? ”
Future Rewards Will Be Lackluster
The benefits of these pandemic stocks are likely to be much higher in the future, or lower inflation rates.
"I would like to point out that we expect the growth of many of these names to be normal as we move beyond the nature of the epidemic," Hogan said. “Many of these companies have provided us with essential services during the epidemic, which may be one of the many options available to us. The reopening process has opened the eyes of many companies that are really thriving during the closure. ”
Many of those stocks did not fit that rating and did not have long-term business models.
Warren Buffett's adviser Benjamin Graham wrote that "in the long run, the market is a ballot box but in the long run a measuring machine."
The foundations of the business will prosper over time, he said. “A company like Peloton may bring in a good product, but is it worth its current rating in a well-stocked gym?
