‘Bricks to clicks’: 3 stock market moving COVID-19 trends that are here to stay in 2021 and beyond

The COVID-19 crisis of 2020 sparked major lifestyle trends that have staying power - even once the virus is a distant memory.

These trends have stock market implications and may even affect your asset allocation.

With an overvalued stock market, investing around themes is important as more and more investors focus on a small number of mega-cap stocks. Eventually, a stock trade becomes crowded.

Here are three COVID-19 related trends that are here to stay:

Bricks to clicks - how the Internet dominated the COVID-19 crisis

The first trend is e-commerce - or bricks to clicks. While this trend was in place well before the outbreak of COVID-19, the pandemic turbocharged this trend. The e-commerce boom that occurred over the past nine months was five years pulled forward. 

This transformation is here to stay. The pandemic has radically altered the way we’re operating.

Even with this surge, e-commerce still only represents under 20% of total U.S. retail sales, according to the U.S. Census Bureau. There is plenty of runway for the e-commerce boom to continue - even post-COVID-19.

The “clicks” portion of this theme isn’t just limited to online shopping, which brings about other universes of stocks that may benefit from this trend. There are cloud, software and data storage components of this theme, too.

The death of linear TV

Another trend in place before the pandemic was the rise of streaming television and the decline of traditional linear television. With many of us spending more time at home, the ability to consume content on demand is even more important.

The work-from-home and stay-at-home environments may spark the death of linear television, where viewers would watch television shows on a specific day and at a specific time.

Even after the inevitable return to normalcy begins, it’s reasonable to expect some of the home-body tastes we’ve acquired will stay with us for the long haul.

There are, like the e-commerce theme, many stocks levered to the death of linear television theme, and those stocks should be represented in investor portfolios.

Strong demand for digital content stimulates demand for the infrastructure necessary to deliver that content - like cables, wireless spectrum and semiconductors. There are stocks in each of these areas.

Society is willing to embrace an ever-growing role for technology in our day-to-day lives, which has positive implications for several other complementary themes.

The rise of e-money (I’m not even talking about cryptocurrency)

This next trend hit me like a ton of bricks: the growth of e-money.

I don’t play a lot of golf, but when I do, there were times when I would lose bets and needed to cough up $10 here and $20 there. I used to use cash for this. Not anymore.

I am pleased to announce that I am now on Venmo. I started doing so in May and I never looked back.

If even this dinosaur is willing to change, the tailwinds propelling e-money’s rise are substantial indeed!

Consumers enjoy the greater convenience and security it offers, while governments appreciate its superior record-keeping and auditability (which make tax evasion and money laundering more difficult).

Certain businesses are well-positioned to benefit disproportionately from this trend, both directly (payment processors, banks, e-commerce) and indirectly (software developers, data storage providers).

While cash probably won’t become a relic anytime soon, don’t underestimate the speed with which e-money can expand its share of the pie.

Richard Saperstein is chief investment officer of Treasury Partners, a New York City- based wealth management firm. In 2020, Mr. Saperstein ranked 6th on Barron’s annual listing of America’s “Top 100 Financial Advisors.”