Trading on Wall Street last week was dominated by one theme: The reopening.
At a rate faster than I’ve seen all year long, investors ditched pandemic winners like at-home fitness stocks, digital advertising stocks, and e-commerce stocks this past week, and piled into airline, casino, and travel stocks amid a flurry of news that confirms that the U.S. economic reopening is in full swing right now.
For starters, the October jobs report came in well ahead of expectations on Friday morning, with particular labor strength in the portions of the economy hit hardest by the pandemic: Manufacturing, travel, and leisure.
That means the companies hit hardest by the pandemic are on hiring binges right now – something they would only be doing if business was great.
On top of that, every “reopening” play reported super strong earnings this week:
Uber (NYSE:UBER) said that ridership trends are rapidly improving. While Yelp (NYSE:YELP) said folks are coming back to restaurants in droves. GoPro (NASDAQ:GPRO) said everyone is buying cameras to film their vacations. Live Nation (NYSE:LYV) said concerts are making a big comeback. And Airbnb (NASDAQ:ABNB) sounded a confident tone on travel trends over the next few months.
On the other side of the ball, pandemic favorite Peloton (NASDAQ:PTON) meaningfully slashed its full-year revenue guidance on the heels of dramatically slowing demand for its at-home fitness bikes, while fellow pandemic favorite Chegg (NYSE:CHGG) said usage of its digital learning platform is quickly falling.
It is becoming pretty clear on Wall Street that the U.S. economy is in full “reopening mode.” With Covid-19 risks retreating, kids returning to (and staying in) school, and a hopefully “normal” holiday season on the horizon, consumers are reverting to their pre-pandemic ways.
So… what’s the best way to play this great reopening of the American economy?
Here’s a response you weren’t expecting: Don’t.
Yep. You heard that right. Don’t play the reopening. Fade the reopening.
Because, what you have to understand is that the reopening isn’t a trend – it’s a moment in time.
Disruptive technology platforms like Peloton, Chegg, and others didn’t just change our lives during Covid-19. They were changing our lives for years before the pandemic ever struck, because at their core, these technology platforms make our lives better.
Peloton makes working out easier, more accessible, faster, more convenient, and cheaper than ever before.
Chegg makes learning more flexible, more on-demand, more affordable, more personalized, and easier than ever before.
Get the point? We don’t use disruptive technology platforms because we have to – we use them because we choose to, because they make our lives better.
But disruptive technologies require consumer adoption, and humans don’t like change, so the adoption of disruptive technologies is a gradual progress. It’s been happening at a very steady pace ever since the advent of the computer in the 1980s.
What Covid-19 did was hit the “fast-forward” button on that progress, because we had to hit the fast-forward button in order to keep the world turning.
But it was too much, too soon. Humans can’t take that much change at once. So, as the pandemic has faded, humans have hit the “rewind” button on technological progress. They’re going back to a point where they’re more comfortable, so to speak.
This won’t last. Soon enough, humans will get back to a point of being comfy – a healthy mix of real-world interactions and digital technologies, that represents a more digitally-connected society than we saw in 2019, but less so than we saw in 2020.
And, once we hit that “comfy” point, society is going to hit the “play” button on technological disruption again.
So don’t chase this reopening. It’s not a trend. It’s a moment in time. It will pass. When it does, the REAL trend will resume – the trend of technological disruption – a trend that has consistently transformed our world over the past 40 years… and which, along the way, has consistently turned steadfast and focused investors into millionaires.
Sometimes, you have to see the forest for the trees.
Right now, everyone is focused on the “reopening” tree – but we’re focused on the forest of technological disruption that is on the horizon.
Paying attention to that forest could be the key to you scoring millions in the stock market.
Sound like something you want to do? If so, we’ll show you how to plug into the future.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
