In the mid-1800\u2019s, the Industrial Revolution landed in America, transforming the nature of work for nearly every American. Workers largely left their farms and homes to take their place on the factory floor, eventually moving onto assembly lines. In the decades that followed, American workers would leave the factories and move into office buildings, as the U.S. evolved from an industrial economy into a service and consumption-based economy. <\/p>\n\n\n\n
Today, as if coming\nfull circle, the pandemic may be sending American workers back home permanently.<\/p>\n\n\n\n
According to the\npolling firm Gallup, the number of Americans working from home has at least\ndoubled, but maybe tripled, since before the pandemic hit. A poll in May found\nthat 52% of employed Americans reported always working from home, while 18%\nsaid they sometimes work from home. Many corporations are upping the ante even\nfurther \u2013 a Microsoft survey of managers and CEOs found that 82% plan to implement\nmore flexible work-from-home policies going forward. Google made headlines last\nweek by announcing it would keep nearly 200,000 employees working from home\nuntil the summer of 2021, the most extreme position taken by a major\ncorporation to date. 1<\/sup> <\/p>\n\n\n\n There are a few\ndownstream investment implications of this potential \u201cwork-from-home\u201d revolution:\nhigher vacancy rates for office buildings in major cities, falling rents in\nmajor cities as people move away from densely packed urban centers, less business\ntravel, significantly higher spending on home office equipment like ergonomic\nchairs, monitors, faster internet speeds, laptops, and so on. <\/p>\n\n\n\n I have noticed quite\na bit of investor enthusiasm about getting ahead of these rapid-fire changes.\nPortfolios are being adjusted to capture trends and to heavily invest in\ncompanies building and servicing the digital economy, while reducing holdings\nin hospitality, retail, airlines, and basically any other area of the economy\nthat does not have a foothold in technology. While I applaud adjusting a\nportfolio in light of secular changes in the economy, my worry today is that the\npendulum is swinging too far, too fast. <\/p>\n\n\n\n ___________________________________________________________________________<\/p>\n\n\n\n Don\u2019t Make Assumptions About Where the Economy is Going, Stick to the Data!<\/a><\/strong><\/p>\n\n\n\n While some companies or industries may appear to have a\nstrong foothold in the future of the economy, you should not forget the\nimportance of diversification. Take a lesson from what we saw in the dot-com\nbust – many investors rushed to position portfolios in companies that they\nassumed would succeed in the new economy, only to find out down the line that a\nmajority of them failed.<\/p>\n\n\n\n So, instead of narrowing in only on what could be the next big\nthing, I recommend keeping your eye on the data, fundamentals and a diversified\napproach. Our just-released stock market outlook report can help you do this as\nit looks at Zacks S&P 500 top picks as well as other key factors impacting\nthe market today, such as:<\/p>\n\n\n\n If you have $500,000 or more to invest and want to learn\nmore about these forecasts, click on the link below to get your free report\ntoday! <\/p>\n\n\n\n IT’S FREE. Download the Just-Released August 2020 Stock Market Outlook<\/a>2<\/a><\/sup><\/strong><\/p>\n\n\n\n __________________________________________________________________________<\/p>\n\n\n\n Business in America is indeed evolving \u2013 fast. But my view today is that too many assumptions are being made about what the economy will look like six months from now, and portfolios are being adjusted hastily in response. There is a growing narrative that workers may never return to offices, business travel may become obsolete, and retail stores will become a relic of the past. While these outcomes may all take place in varying degrees, I think many investors are over-correcting. The \u2018new economy\u2019 that many people are imagining is one that will take years or decades to develop. \u00a0<\/p>\n\n\n\n Companies across the\nspectrum are learning quickly about the successes and failures of remote work,\nand what tools and software are ideal for business. In the next year or two, I\nthink we could see an enormous amount of turnover in the tech space, with fortunes\nbeing made and lost as innovators and upstarts jockey for market share with new\ninventions. This is why I think investors should tread carefully \u2013 not because\nI do not believe that changes are coming, but because too many assumptions are\nbeing made about who the winners and losers are going to be. We saw a version\nof this outcome during the dot-com bust, when investors rushed to position\nportfolios in companies that surely would be \u2018home runs\u2019 in the new economy. A\nmajority of them failed.<\/p>\n\n\n\n Bottom Line for Investors<\/strong> <\/p>\n\n\n\n Many companies are\nmoving quickly to adopt new technologies and processes in the wake of the\npandemic. CEOs and management teams are shuffling around how they do business,\nand rethinking organizational structures.<\/p>\n\n\n\n This type of\nplanning will no doubt change how we do business in America. But what I think\nwe will find is that, in time, many of these new processes or software or organizational\nstructures simply will not work. They may need to be reinvented several times\nover, and certainly will be tweaked along the way. For investors trying to get ahead\nof the major changes in business today, it may mean giving up a diversified\ninvestment approach in an effort to chase companies and trends that do not\ncatch on, or that do catch on but ultimately get upended by a different\ninnovation or technology. In a time of rapid change, sometimes it\u2019s best to\ntake your time. <\/p>\n\n\n\n