I'm not so sure.....
Pfzer along with BioNtech have successfully created a vaccine which looks like it is effective against Covid-19. On the back of this Airlines and Hospitality rallied across the globe with some companies like Easyjet gaining over 30% in one trading session. However, is this the saviour we have been waiting for and is the rotation out of stay at home tech premature? For me there are still a number of outstanding questions: How long does the vaccine last? How affective is it in the elderly who need it most? Does it mostly prevent mild cases or severe cases? If you contract Covid will the vaccine prevent you from spreading it?
What are the long term effects of taking the vaccine? These are just a few questions I can think of and I'm sure there are many more from people far more qualified than me!
As I mentioned we had a lot of money rotating out of tech into airlines, banking, hospitality etc. The market is forward thinking so it is to be expected but in the UK we are still in lockdown, parts of Europe are still in lockdown so how does a company like Easyjet which runs on extremely tight margins on a good day justify a 30% rally? I don't think it does. I think it's short sighted of investors to think the world is going to go back to normal based on a vaccine which hasn't even finished stage 3 trials. Work from home will become the norm in my view. Companies save office space which saves money, they can recruit globally instead of just locally. The technology is there to interact with staff and monitor workloads. To assume big business will willingly re-fill office space with staff within the next year is unrealistic in my view. Please don't assume I'm anti-vaccine. I think it's a good thing, I want to go on holiday, have a normal pint in the pub and go the the supermarket without queuing. I'm sick of wearing masks like everyone else but I do feel like people are jumping the gun and I do think hospitality and airlines will continue to struggle well into next year. Even with a vaccine restrictions will still be in place which can and will affect margins. I do think some 'stay at home' tech was trading too high. Zoom is a prime example, although I think it was a good investment below $100, it is now too high for a technology which is easily replicated by other big firms like Microsoft or Google. We've seen money flowing out of the tech market in general such as Paypal & Amazon taking a hit. We are approaching the biggest shopping season of the year whilst half of the world is in lockdown. Where do you think people will spend their money if they can't go into a real shop? Online shopping will continue to thrive along with online payment providers. I'm still a big advocate of tech and believe it IS our future, I'll be interested to see how the vaccine pans out and I do hope we return to some form of normality in the near future! You can follow me on etoro by clicking here!