Video Alert: Market Madness Explained

Hello. This is John Persinos, editorial director of Investing Daily, in a video presentation for Tuesday, April 21. In the following video, I provide a concise summary of my latest investment advice. For a longer and more comprehensive analysis, read the article below.

Well, the markets continue to exhibit extreme volatility amid the coronavirus crisis. The economic news is grim, with 22 million Americans thrown out of work in less than a month, the worst unemployment data since the Great Depression of the 1930s.

First-quarter corporate earnings are projected to plunge 10% on a year-over-year basis. Many companies have withdrawn earnings guidance because conventional metrics have been rendered useless by the pandemic.

The three main U.S. stock market indices finished sharply lower Monday, with all 11 S&P 500 sectors in the red. The Dow Jones Industrial Average shed nearly 600 points.

In pre-market futures trading Tuesday, the three stock indices were poised to extend their losses. Spurring the swoon in stocks is chaos in the oil markets.

Crude oil’s collapse…

Monday was truly an historically bad day for oil, as oil prices dipped into negative territory due to energy demand destruction from the coronavirus pandemic. The global oil glut has gotten so bad, there’s not enough storage space to go around.

The price of West Texas Intermediate (WTI) crude oil, the U.S. benchmark, fell more than 300% Monday to settle at -$37.63 per barrel (those aren’t typos). That’s the first time in history that WTI crude futures have fallen below $0. The following chart tells the story:

Essentially, the negative price of oil means that oil producers are paying buyers to take the glut of crude which they can’t store, as stockpiles of crude overwhelm oil storage facilities.

Economic crises loom in oil producing countries, which will cause collateral damage to the global economy. A stable oil price is preferable to this unprecedented volatility in the energy patch, not just for the sake of the oil industry but for the economy at large.

Read This Story: OPEC’s Oil Cut: Big Deal or Big Dud?

It’s my contention that further stock market sell-offs await us. However, that doesn’t mean you should throw up your hands and succumb to despair. Even under these conditions, you can still make investment decisions that pay off down the road.

When the madness ends…

I assure you: one day, this pandemic will be over. In the past, I’ve written about 10 megatrends that will accelerate in a post-COVID world. Now’s a good time to revisit and update these investment themes. You can start incrementally increasing your exposure to the following sectors and sub-sectors, using stop losses.

1) Medical information technology. In the booming health care field, cost containment is the name of the game. Federal and state regulators increasingly mandate the use of information technology to digitize and analyze patient records. Software firms in this space enjoy long-term tailwinds.

2) Robotics/automation. Increasingly integrated with artificial intelligence (AI), robotics/automation is permeating a wide variety of industries. The International Federation of Robotics estimates that over 2.5 million industrial robots are at work this year. But it’s not just manufacturing; programmable robots are spreading through myriad aspects of daily life.

3) Next-generation power providers. The migration from coal to natural gas and renewable energy confers many environmental advantages, but it also represents a watershed in the utilities sector. Current chaos in the crude oil market further cements this trend. Long-term plays include suppliers of renewable energy such as solar and wind. For a “dividend map” of our favorite utilities stocks, click here.

4) Technology for 3D-sensing. Makers of chips and other components that support three-dimensional sensors embedded in smartphones face growing demand. These capabilities are crucial to the exploding field of virtual/augmented reality, which is migrating beyond video games and into commercial applications. As for video games, they’re exploding in popularity during the pandemic and making new converts.

5) Aerospace/defense innovators. When this pandemic is over, geopolitics will be more unsettled than before, fueling ever-greater defense expenditures. Your best bets are smaller defense firms that specialize in next-generation electronics that integrate weapons systems within the Internet of Things (IoT).

6) Marijuana legalization. According to marijuana research firm New Frontier Data, the legal cannabis market in the U.S. accounted for $18.2 billion in sales in 2019. Cannabis sales growth is projected to increase in 2020 and beyond. But not all pot stocks are created equal. You need to separate the reality from the hype. For our report on the best marijuana investments, click here now.

7) Immunological treatments. Immunotherapy is in the vanguard of medical science, as researchers try to find ways to get the body to fight diseases by itself. Biotechs with immunotherapy drugs in the pipeline are poised for big gains, especially as the coronavirus pandemic brings the need for new treatments to the fore. Reports in recent days of a new vaccine to treat COVID-19 have cheered investors and put immunological research on the front pages.

8) Breakthrough tech in e-commerce. We’re seeing the inclusion of ultra-sophisticated technology, notably AI and IoT, with online shopping. The results include features such as visual search tools and “deep learning” capabilities that make it faster and easier for shoppers to find and buy what they want. Social distancing due to the coronavirus outbreak underscores the desirability of these retail technologies.

9) The roll-out of 5G wireless. Over the last few months, I’ve devoted considerable coverage to 5G technology. The need for super-fast wireless bandwidth is demonstrated every day during the pandemic lockdown. Looking for specific stocks that will ride the “fifth generation” wave? For our comprehensive 5G investment report, click here.

10) Remote work-at-home technologies. As workers get increasingly accustomed to working at home, the use of virtual private networks, remote conferencing capabilities, and cloud-based collaboration are increasingly familiar activities. The importance of cloud computing is being demonstrated with special urgency, in homes and businesses, during the coronavirus pandemic.

Questions about how to invest during the pandemic? Send your correspondence to: mailbag@investingdaily.com. In the meantime, stay safe.