I got the dreaded email from the kids’ school this week.
“Your child was in P.E. class with a student who tested positive for COVID-19.”
Thankfully my 6th-grade twins that got exposed are healthy with no underlying risk factors. So even if they wind up contracting the coronavirus, I expect them to be just fine.
It’s just sad that they’ll need to follow our state’s quarantine protocol and be under “house arrest” until the day after Christmas.
How ironic to receive this news the very same day that the first Americans outside of clinical trials begin to receive Pfizer’s vaccine.
It’s a good reminder that coronavirus isn’t over yet. And as investors, we need to expect the occasional curveball — even as our country begins to exit this historic period.
Today, I want to discuss what we can expect from the markets during this uncertain period. That way, you won’t be caught off-guard. And you can use this time to grow your retirement wealth instead of worrying about the conflicting news stories that will surely surface.
The Great Reopening Is Still On Track
It’s hard to believe that it was almost a month ago when we started talking about the great reopening. On Nov. 17 (following positive results on two different vaccines) we picked out three stocks to profit from the reopening of our economy.
Since then, shares of all three plays — Darden Restaurants (DRI), Cedar Fair L.P. (FUN) and United Airlines (UAL) — have traded higher. But not without some back and forth action as traders jockey for position.
This brings up an important point…
As the vaccines start to roll out and investors get excited about reopening our economy, we’re likely to see some big surges in the overall market. And that’s especially true for the stocks that will benefit most from the reopening.
But I’m sure there will be some unexpected bumps along the way.
Maybe a shipment or two will be lost. Or we may receive news reports of some unexpected reactions to the vaccine.
With tens of millions of people set to receive the vaccine, it’s bound to happen that something will go wrong at one point or another.
When this happens, we can expect markets to pull back.
It may be a short-term pullback that lasts just a day or two. Or it may turn out to be a bigger deal that triggers more widespread fear on Wall Street.
The key for us as investors is to be prepared for this volatility. That way, it doesn’t catch you off-guard and you don’t wind up reacting with your emotions.
Instead, here’s what I would recommend…
Start Building Your List Now… And Execute Your Plan Later
In addition to the three stocks named above, there are dozens of names you can invest in that will benefit from the economy reopening.
Think about vehicle manufacturers that will profit as people upgrade their vehicles again.
The travel industry will regain customers it lost to travel restrictions. And people will spend money on everything from apparel and luggage to attractions and restaurants.
Thousands of people will start attending events again. And you can bet that those people will buy memorabilia tied to their favorite sports teams, bands or Broadway shows.
I’m excited about manufacturing companies, equipment sellers and even old-fashioned utility companies. It seems like every day I’m adding a few new stocks to my “reopening watch list.”
But here’s the thing… You don’t have to jump in all at once!
Because if (and when) we get a pullback in these reopening names, the temporary sale prices will give you a chance to start building your positions.
In a situation like this, I suggest dividing the money you want to invest in three or four different buckets. Then once a pullback begins, invest one portion into some of your favorite reopening stocks.
Then if the market continues to pull back, you can wait a week or so and invest the next portion.
By being patient and investing a bit of your capital at a time, you’ll be able to take advantage of a pullback.
And even if the market pulls back longer than you expect, you’ll be able to buy more shares — getting an even better deal on subsequent investments.
It’s a great way to steadily take advantage of the opportunities this market will give us, without taking too much risk all at once.
Of course here at Rich Retirement Letter, we’ll follow the action and keep you up to speed on the best recovery opportunities.
So stay tuned!