There’s nothing like a pandemic to unearth festering disparities on multiple levels. While we were already aware of the wealth gap, the education gap, the health care gap, and the incarceration gap, the pandemic highlighted and exacerbated all of these, and then some.
To wit, the incarcerated population faced a higher propensity of contagion from COVID-19. Persons in lower wage, labor-oriented positions such as grocery store cashier’s, hospital workers and food service workers were deemed as essential and had to continue working despite the high risk of exposure and contagion.
The pandemic brought more woe unto the most consequential of all gaps – the mortality gap. Based on the United States’ experience with COVID-19 so far, the life expectancy for whites has been reduced by one year, yet the life expectancy for Blacks has been reduced by three years according to published reports. (See “The U.S. Lost a Whole Year of Life Expectancy – and for Black People its nearly 3 Times as Worse”. USA Today, Feb. 21).
However, one of the most pronounced disparities during the pandemic has been in the area of investing. As far as the stock market goes, it has been the classic case of the haves and the have nots. Put another way, during the “pandemic stock market”, the rich have gotten richer while the poor have gotten poorer.
For starters, persons in labor positions either were forced to continue to go to work, oftentimes earning minimum or very low wages. And it should be noted that those laborers who were not able to continue working have likely experienced a cash flow crunch or worse. Whereas persons holding corporate or other white-collar jobs were able to work from home thereby nesting in a protective bubble away from the pandemic, with their income mostly uninterrupted.
The work at home crowd had a grand old time playing, and maybe even manipulating the stock market during the pandemic. As has been the case throughout market cycles, the novice investors may have sold stock in a panic in March of 2020 when the market swooned (down) and the experienced investors took advantage of the opportunity as stock buyers.
Then, after the market low in March of 2020, it was off to the races. Unlike the economy itself, which stumbled and staggered under the throes of the pandemic, the stock market soared with many “pandemic stocks” rising exponentially beyond their annual low price. These pandemic plays included the likes of Zoom, Chegg, and Peloton. Then as though some financial maestro had choreographed a sector rotation parade, different industries continued to power the market higher. There were biotechs, then green energy, and after that, streaming services. Many stocks in these industries experienced uncanny appreciation during a time when many households were suffering incredible losses – of income, jobs, an even life.
Anyone who was hoping 2021 would begin with a reversion to normalcy was hugely mistaken. From a standpoint of social unrest, the year’s advent has been beyond the pale. We are also off to a raucous start with respect to the stock market. Retail investors found their collective strength primarily through the Reddit platform, and perhaps unintentionally teamed up with institutional investors to move certain stocks in a way that created and eliminated sheer fortunes.
Interestingly a few of our youth investors and investment clubs in Madison and Milwaukee enjoyed the precipitous upside moves in stocks. However, regrettably, too few individuals and families of color were able to participate in what may turn out to be a once in a lifetime stock market shindig.
The pandemic, and all that came with it will be indelibly etched into the history and lore of the American experiment. The realities of the past twelve months revealed for some, and underscored for others, the pressing need to even out some of the imbalances which make the American experience so disparate between different population groups.
There is perhaps no greater disparity in the United States than between a person who understands and acts upon the importance of being a lifetime investor versus the individual who does not know what they don’t know when it comes to investing.
In an effort to ensure that the past is not prologue, one thing that can and should be done is to empower every young person with the knowledge and opportunity to become an investor. So, to that end let’s make sure that all youth, especially youth of color, are taught about and exposed to stock investing at the earliest of ages. This can be done, this should be done. Borrowing the tag line of one of the better performing stocks over the decades, let’s “Just Do It.”