Murphy’s law might be surprising again. “Everything that can go wrong will go wrong” seems to be 100% true in 2020.
COVID-19 cases continue to rise in many US states. Concerns are growing that the coronavirus outbreak could escalate in the fall as seasonal flu raises its ugly head. And now US health officials are closely monitoring another virus that scientists fear could turn into another pandemic.
Investors saw the stock market drop when the COVID-19 pandemic hit for the first time only to recover well. With the potential of another deadly virus on the way, should you change the way you’re investing sooner rather than later?
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Why are the experts nervous?
Last week, a team of scientists published their findings on a newly discovered influenza strain in a leading scientific journal, procedures of the National Academy of Sciences. Their report indicated that the new strain is a variation of the H1N1 swine flu that caused a global pandemic in 2009. That outbreak infected nearly 61 million Americans and more than 700 million worldwide.
H1N1 influenza also caused one of the worst pandemics in modern history in 1918. About 500 million people worldwide were infected with the virus, with at least 50 million deaths. The 1918 pandemic was so severe that it caused the average life expectancy in the US to drop by about 12 years for men and women.
Like the new coronavirus that causes COVID-19, the new strain of the H1N1 flu appears to have originated in China. The researchers claim that it has “all the essential characteristics of a possible pandemic virus.”
Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, told a committee of the United States Senate last Tuesday that the new strain of the virus is not “an immediate threat,” but added that “it is something we must monitor, just as we did in 2009 with the onset of swine flu. “
So far, the virus does not appear to have infected humans. However, scientists have observed that the rate of exposure to the new strain of the virus has increased among younger workers in the Chinese pig industry, raising concerns that it may spread from pigs to humans.
What investors should not do
There are two things investors should not do regarding news of a new virus with the potential to become another pandemic.
First, you shouldn’t panic. In this case, the new strain of H1N1 flu has apparently not infected humans until now. Hopefully, it won’t infect humans at all. You can bet that scientists in the US, China, and other countries are watching the virus very closely. If there is even a hint of another outbreak, experience with COVID-19 should lead to a quick response.
Second, you shouldn’t ignore the potential threat. There is a real possibility that a second pandemic could follow in the footsteps of the current COVID-19 pandemic. Whether we like it or not, the risk of bacterial or viral outbreaks won’t go away, even if the new strain of H1N1 flu doesn’t become a problem.
What should you do
So is there a proactive step investors can take? I think so.
Perhaps the best you can do is adjust your investment portfolio to reflect increased attention to biological threats. There are several ways to do it.
One is to buy shares of companies on the front lines of antiviral therapy development. Eli Lilly (NYSE: LLY) It’s a good example. The drug maker established key partnerships with smaller biotechnologies to develop antibody therapies to fight COVID-19. It initiated clinical studies of medications in its product line and portfolio of products that showed promise in treating the disease.
Granted, the new strain of H1N1 flu is very different from the new coronavirus. However, I think Lilly’s swift response to the COVID-19 outbreak highlights the company’s agility. If a new viral threat arises, the large pharmaceutical stock could jump if Lilly reacts as fast as she did with COVID-19. And if not, Lilly’s strength in diabetes, immunology, and oncology should make him a long-term winner, regardless.
Image source: Getty Images.
Another potential step is investing in companies that experienced strong sales growth during the COVID-19 pandemic. I would put General dollar (NYSE: DG) near the top of the list. The discount retailer even outperformed the industry giant Walmart on several key fronts in the first quarter of 2020.
Dollar General stores the types of products that consumers need in a pandemic. Its stores are conveniently located for many Americans. Stock is also poised to perform well during good and bad economies.
Even a hint of a second pandemic would likely add fuel to the fire for the growing adoption of telehealth. That would almost certainly benefit Teladoc Health (NYSE: TDOC), leader in the provision of telehealth services. Teladoc’s shares have shot up nearly 150% so far this year and would likely gain even more momentum if concerns about another viral outbreak increased.
However, I think the horse is out of the stable with telehealth, even if the health concerns decrease. Teladoc has only scratched the surface of its overall market opportunity no matter what happens next.
Maybe anything that can go wrong will go wrong. But my opinion is that investors cannot go wrong when buying Lilly, Dollar General and Teladoc Health.
