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Thursday, May 7, 2020

During the Pandemic and its Recession, a Particular Investment Strategy may Prove Useful

During a recession many companies sell less, and specially during a pandemic, some are more affected since the beginning, yet the others may experience issues in the long run, but not in its dawn.

What comes to mind after that? Airlines have plummeted in market valuation. They barely have costumers. On the other hand, you have other companies that despite common sense gives a hint that those parties should sink too, they may not do so for now. At least in America, the airline industry has several players.

So according to intuition, markets with several competitors are of the most affected with the start of the crisis, while companies with enough market power will stay afloat in the meantime.

That is why the technology stocks have been increasing dramatically in this uncertain pandemic times, for now. Take Google, main seller in advertisements, although a recession will surely kick in because companies won't want to buy much advertising if there aren't enough potential buyers. Take Amazon, a huge retail seller, and most importantly, sells online.

Here there is a clear correlation, industries with market power may keep stable in the meantime.

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