From Panic to Profit: What COVID-19 Stocks Taught Us About Crisis Investing

🔥 This Week’s Insights:

• Fed Cuts Rates: Is This the Spark for the Next Market Rally?

• Learn to Invest with Just $100—Tune in Monday for Practical Tips You Can Start Using Now.

• Zoom’s Pandemic Surge: What a Stock's Rollercoaster Ride Can Teach You About Crisis Opportunities.

WHAT THE MARKETS TAUGHT US THIS WEEK:
📊 The Fed Cuts Rates: What it Means for Your Investments)

This week, the Fed cut interest rates by 50 basis points—the first time since 2020.

Why should you care? Lower rates make borrowing cheaper for businesses, which can lead to stock market growth.

But here's the kicker: not everyone is convinced it's smooth sailing ahead.

While markets jumped, the Fed hinted at more cuts this year, and some policymakers disagreed on the size of this one.

Bottom line?

Expect more volatility, but watch for opportunities—especially in sectors that benefit from cheaper capital​

STOCK INVESTING MYTHBUSTERS:
💥 Myth: High returns require high risk.

Reality: While risk and reward are related, you don’t need to gamble for gains. Consistent, moderate returns over time can outperform high-risk bets.

 UNLOCK INVESTING SCHOOL:
💡The COVID-19 Market Crash: How Zoom Went from Obscure to Essential

In early 2020, I was sitting in my tiny flat, adjusting to the "new normal." Overnight, I went from commuting to a large financial institution’s office to staring at my laptop in my makeshift home office. And I wasn’t the only one. Millions of people worldwide were suddenly working from home, sparking one of the most dramatic shifts in the stock market I’ve ever seen.

The stock market crashed. It felt like the entire world went into panic mode—industries like travel, retail, and hospitality took massive hits. But here’s the crazy thing: while some stocks tanked, others soared. Enter Zoom Video (ZM).

Before the pandemic, most of us had barely heard of Zoom. Skype was the go-to for video calls, right? But within a matter of weeks, Zoom became essential. People needed a way to work remotely, keep in touch with friends, and even host virtual events. Suddenly, Zoom wasn’t just a convenience; it was a necessity.

So what happened to Zoom’s stock price?

In January 2020, Zoom was trading at around $68 per share. By October 2020, it had skyrocketed to over $500. That's a 635% increase!

What caused this surge? Simple: demand.

When entire populations started working remotely, Zoom was perfectly positioned to meet the need. Companies were looking for reliable video conferencing tools, schools needed virtual classrooms, and individuals sought ways to connect with loved ones. And Zoom delivered.

But here’s the twist: once the immediate panic of the pandemic passed, and people started returning to some form of "normal," Zoom’s stock price began to cool off. By mid-2021, the stock price had dropped significantly, even though Zoom was still a major player. Today, the company is stabilizing, but it’s no longer the darling of the pandemic.

So, what’s the lesson here?

When markets crash, there are always opportunities.

In 2020, Zoom was one of those rare companies that not only survived but thrived because it was at the right place, at the right time, with the right product. Market crashes can be terrifying, but they can also open up new opportunities if you know where to look.

📝 Practice Problem: Let’s Apply This!

1. Look up Zoom Video's (ZM) stock price at the beginning of 2020 and compare it to its peak later that year. What does this tell you about the relationship between global events and stock demand?

2. When did Zoom’s stock price start to fall, and what external factors contributed to the decline?

3. Think about another stock that thrived during the pandemic. How has its price performed post-pandemic?

4. Do you think Zoom’s current stock price reflects its true value in a world where remote work is still prevalent? Why or why not?

💬 Learner Hint: 

When analyzing a stock’s performance during a crisis, always ask yourself: What changed in the world, and how did that affect demand for this product or service? Look for companies that solve new problems during uncertain times—they often experience rapid growth. However, be cautious and consider whether that demand will last or if it’s just a temporary spike.

✨ Sharpen your finance knowledge and skills by tackling the challenge!

NEW THIS MONDAY ON THE UNLOCK INVESTING PODCAST:
🎙️ How to Start Investing with a Small Budget

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Thanks for reading.

Keep learning and see you next week 👋

Important Disclaimer: The content in this newsletter is for educational purposes only and does not constitute financial advice. All information provided is based on my personal opinions and experiences and should not be taken as a recommendation to buy, sell, or hold any financial instruments. Investing involves risks, including the potential loss of capital, and you should always conduct your own research or consult with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results.