By Katie Gomez

The pandemic changed us all: the way we worked, loved, lived, and especially the way we viewed the market and our finances. The profession of stock trading has shifted tremendously in population, frequency, and focus since COVID-19 changed our lives. It is wild to think that four years ago, we were boarded up in quarantine, left with little to no interaction but our screens. This article assesses the economic impact of the pandemic and how it acted as a catalyst for some of the most dramatic changes in stock trading to date. 

Long-term Economic Impacts of COVID 

The pandemic has had a profound and lasting impact on the global economy, triggering significant changes in consumer behavior, industry landscapes, and government policies. However, one of the most notable changes was the accelerated adoption of e-commerce and online shopping. This drove consumers to rely more on home delivery services and steered them away from traditional brick-and-mortar stores and restaurants. 

This trend has been accompanied by a growing preference for contactless payments and digital transactions and a heightened focus on health, wellness, and safety. We saw consumers seek out personal protective equipment (PPE), health-related products and services, and more activity in FSA and HSA accounts.

We didn’t return to how things were pre-pandemic; we agreed to create this new normal that still includes the changes made from COVID. We see the effects of COVID all around us still, including contactless payment, shortened business days/hours, limited restaurant capacity, and new health and safety protocols lingering from years ago. 

The stock market at this time exemplifies evolution and adaption at its finest. When everyone was isolated, and everything was shut down, the market remained open, making it more appealing than ever. The most significant change was probably the appeal of working from home, as we now have seen with the dramatic increase of people working remotely, from influencers to analysts to customer service reps, even therapists and doctors. 

According to the U.S. Bureau of Labor Statistics (BLS), the percentage of people working from home in the United States has significantly increased since 2020. Even though businesses have reopened and job sites have been returned, many individuals have remained confident that their jobs can easily be done from home. 

So, it is no surprise that a significant portion of the population (of all ages, genders, and backgrounds) decided to try their luck in trading. Stock trading was one of the few luxury professions that allowed traders to work from home long before COVID, and for those who had never tasted the sweetness of remote work before the pandemic, trading and all of its autonomic glory became enticing. 

Making Money Moves 

The pandemic and subsequent lockdowns led to a significant increase in retail trading activity. While the exact total number is not available, it is evident that the pandemic and quarantine measures drove a substantial influx of new retail traders into the stock market, likely numbering in the millions. This surge in retail trading activity has notably impacted the market dynamics and trading landscape since the onset of the pandemic. Charles Schwab reported a record 609,000 new brokerage accounts in the first quarter of 2020, with a significant portion opened by first-time investors. Meanwhile, Robinhood experienced a 30% increase in users in the first quarter of 2020, adding approximately 3 million new accounts.

Additionally, Trade Ideas experienced a dramatically significant influx of new retail traders interested in our scanning platform during the COVID-19 pandemic. Trade Ideas is still mentioned in online forums, social media, and trading communities as a popular tool among retail traders, particularly those who started trading during the pandemic.

Sector Stocks Affected by COVID-19 

So, where does this leave the actual stocks in the market? The pandemic reshaped industry landscapes, with some sectors thriving while others face challenges. Investors and traders have noted these trends and have increasingly focused on companies within these thriving sectors, including:

Technology: The tech sector is driven by the surge in demand for remote work technologies, cloud computing, cybersecurity services, online communication, and collaboration tools.

Healthcare and Biotech: This sector is driven by increased funding for vaccine development, medical research, and the growth of telemedicine and remote healthcare services.

E-commerce and Online Retail: Driven by the accelerated adoption of online shopping and home delivery services, as well as growth in the logistics and delivery services industry.

Digital Entertainment and Gaming: With people spending more time at home, the demand for digital entertainment, streaming services, and online gaming grew significantly.

Home Improvement and Consumer Goods: These companies have seen increased sales as consumers have focused on enhancing their living spaces and home offices.

Adapting to the “New Normal”

To navigate this new standard effectively, traders must adapt their strategies to capitalize on the well-positioned sectors and trends, focusing on tech companies driving digital transformation and healthcare and biotech firms at the forefront of medical innovation. 

Renewable energy and sustainability-focused companies (ESG) will also likely benefit from the growing global emphasis on combating climate change. 

Incorporating robust risk management techniques, such as diversifying across sectors and asset classes and employing hedging strategies, can help mitigate potential losses in the face of market volatility. Moreover, leveraging advanced data analytics and AI-powered tools can provide traders with valuable insights and inform their decision-making processes in an increasingly complex and rapidly evolving market environment. Staying ahead of the curve is essential for traders seeking to navigate the stock market’s complexities successfully. 

The post-pandemic stock market demands high adaptability and flexibility from traders. As market conditions evolve, it is crucial to regularly reassess and adjust trading strategies to ensure they remain effective and aligned with current realities. This includes modifying risk management approaches, reallocating assets, or exploring new sectors and investment opportunities following trend shifts.

Ultimately, success in the post-pandemic stock market will require a combination of continuous learning, adaptability, and a willingness to embrace change. By staying informed, engaged, and open to new possibilities, traders can navigate the challenges and opportunities of the future stock market landscape with confidence and resilience.

Trade Ideas has actively engaged with the growing retail trading community, offering educational resources, webinars, and live trading sessions to help new traders navigate the market. Visit Trade Ideas today to help navigate the post-pandemic market successfully.