Profit From The Upheaval

Drastic changes in behaviour by consumers, governments and central banks have created both opportunities and questions

Greg Hoffm

‘If somebody from 2019 had time-travelled here, would they notice anything different?” I asked my wife Janine, while out at a funky restaurant/bar recently. We were spending a few days in Sydney’s glitzy eastern suburbs during a house swap with some friends.

Apart from the mandatory hand sanitiser and QR code check-in upon entry, the only other noticeable change for someone who’d never experienced Covid-19 would be the spacing of the tables. Instead of being jammed in elbow-to-elbow in the narrow terrace building, the tables were comfortably spaced, which we enjoyed.

Wearing the poo-brown face mask Janine had bought for me (matches my beard, she says), I visited a nearby grocery store the next day. A few other people were wearing face masks and one older gentleman had a full face shield. That might have been more puzzling for our imagined time traveller. But to those of us who’ve lived through 2020, it’s understandable.

We’ve all learnt to adapt to the changes Covid-19 has wrought upon our daily lives, but what about the implications for our investments?

Obvious beneficiaries

As people became nervous about leaving their homes, or were ordered to stay there by lockdown restrictions, they sought to do more online. This turbocharged the growth of online retailers like Kogan. com (ASX: KGN) and Temple & Webster (TPW). Their share prices have shot up correspondingly, with Kogan up fivefold from its March low and Temple & Webster up almost eightfold since then.

The trick for sharemarket investors is that you generally don’t get great returns by chasing what has already become obvious to most others. Better to look for areas where the market may have under-reacted to a company’s improved prospects.

On that front, Frontier Digital Ventures (FDV) is of more interest to me. The company has benefitted from the pandemic and seen its shares rise but perhaps not by enough.