Just when the world thought it was putting the pandemic nightmare in the rearview mirror, Covid-19 decided to strike back with a worrisome new coronavirus variant that spreads like wildfire and may evade current vaccines.
Dubbed “omicron,” the new variant emerged in South Africa over the past few weeks and was identified late last Thursday – on Thanksgiving, of all days. Since then, it has been verified across the globe, prompting many countries to halt travel to and from South Africa and its neighboring countries. Some countries – including Japan and Morocco – have stopped all international travel altogether.
All of this caused the stock market to crash last Friday, and while stocks clawed back some gains yesterday, they remain well-off their pre-omicron levels.
The big worry has to do with the biological profile of omicron.
Unlike previous variants, the omicron variant of Covid-19 includes multiple mutations in what is known as the spike protein – the specific protein of the virus that attacks human cells. Today’s Covid-19 vaccines are designed to attack the spike protein, and that’s precisely the problem. Because the spike protein in previous variants has been largely similar, our vaccines have adequately worked to protect against all variants.
That may not prove true with omicron…
So the million-dollar question is whether omicron evades our vaccines, and we may not know the answer for another few weeks. But most scientists believe that our vaccines will, at the very least, prove much less effective in preventing the spread of omicron. If so, then scientists will have to develop a new vaccine, distribute that new vaccine, and the world may be due for another spat of sporadic travel restrictions and lockdowns over the next few months.
That’s the fear that caused Wall Street to freak out last Friday.
Such fears were eased yesterday, however, as reports rolled in from South Africa that omicron cases have been very mild to-date, underscoring the notion that while this new coronavirus variant may be more contagious than previous variants, it may simultaneously also be less severe.
As a result, stocks rebounded strongly yesterday.
Amid all this volatility, I don’t blame you for asking the question: What should I do?
Should you sell everything because omicron is Covid 2.0? Or should you aggressively buy the dip because omicron fears are overblown?
The answer is some blend of the two extremes. Here’s how I see it:
Omicron will likely evade vaccine efficacy, and as such, cause a quasi-aggressive policy response from governments across the globe. Those responses will likely include mobility restrictions, quarantine periods, and potentially even moderate lockdowns. That will negatively impact economic activity over the next few months.
However, such measures won’t last more than a few weeks, or months, and they will be met with notable consumer resistance in some countries. Therefore, this is not a return to March 2020 – but rather, a temporary return to March 2021, when pretty much everything was open but consumers were a bit more cautious.
The net effect will be a temporary and very minor economic slowdown in the fourth quarter of 2021, followed by a resumption of the global economic recovery in early 2022.
So… back to the big question… assuming all of that to be true, what should you do as an investor?
Well, you could try to “play the noise” and invest in pandemic favorites like Peloton (NASDAQ:PTON) and Zoom (NASDAQ:ZM) in the fourth quarter, before selling those in Q1 and piling back into cyclical stocks tied to the economic recovery.
Doing that may score you 10% or 20% over the next few months.
Or, you could “ignore the noise,” and invest in secular growth stocks that will reshape the world over the next few years, regardless of how omicron impacts the economy in the near-term.
Doing that may score you 500% or 1,000% returns over the next few years.
Which one sounds better to you? Netting 20% over the next few months and constantly worrying about the day-to-day gyrations of an unpredictable virus? Or scoring 10X returns over the next few years and not losing any sleep over omicron?
We like the sound of the latter, which is why amid today’s omicron-driven volatility on Wall Street, we’re doing one thing and one thing only: looking for 10X opportunities in disruptive technology stocks.
We believe the biggest opportunities can be found in the electric vehicle sector, as EVs are shaping up to take over the world.
Specifically, we are very bullish on one promising EV battery breakthrough that is emerging right now; which we believe could be the key to pushing the multi-trillion-dollar EV Revolution into the mainstream.
And, believe it or not, at the heart of this battery breakthrough is a single $3 stock that could be Wall Street’s biggest “hidden gem.”
To learn more about that small stock – and how to score huge gains in the stock market while everyone else is worrying about Covid-19 – click here.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.