Here’s How to Play a COVID Comeback

I tested positive for COVID-19 last week. So did my wife, who thinks she may have picked it up from someone at her office.

We are both fully vaccinated and boosted, so we were surprised that the virus was able to infect us so easily. The good news is the symptoms lasted only a few days and we are both already feeling better.

That experience has me wondering just how vulnerable the global economy remains to the coronavirus pandemic. We’d all like to believe that it is just about over, but that may not be the case.

I’m not so sure that the daily case count for COVID-19 is as accurate an indicator as it once was. Neither my wife nor I saw a doctor since our symptoms were mild, so we won’t show up in the statistics.

I suspect that is true of many other people that have quarantined at home without the need for medical intervention. If so, then COVID may be spreading a lot faster in the United States than the numbers indicate.

Already, China is taking draconian measures to prevent the spread of COVID within its borders. During the past month, the seven-day average of the daily case count in China jumped from less than 1,000 on March 12 to more than 24,000 on April 12.

In the U.S., the daily seven-day average has remained around 30,000 over the past month. That is far below its peak level above 800,000 in January when the Omicron variant went on a tear.

But if COVID is actually growing much faster than what the recent numbers suggest, it may not be long until social distancing restrictions are reimposed. If so, that creates a timely investment opportunity that thus far is being ignored by Wall Street.

The Return of Work from Home

I don’t expect most restaurants and stores to shut down again. They can’t afford to. But I would not be surprised if many offices revert to a remote workforce.

If that happens, the Direxion Work From Home ETF (WFH) could surge in value. Its investment objective is to track the Solactive Remote Work Index, which consists of businesses that facilitate remote work environments.

Its top five holdings are Vonage Holdings (NSDQ: VG), Marvell Technology (NSDQ: MRVL), Broadcom (NSDQ: AVGO), Palo Alto Networks (NSDQ: PANW), and Fortinet (NSDQ: FTNT). Information technology stocks comprise 85% of its portfolio, followed by communication services (10%) and consumer discretionary (5%).

Last summer, WFH peaked above $80 as the Delta variant of COVID-19 surged out of control. Since then, it has fallen back below $65 and has shown little signs of life.

This may be the ideal time to stake out a position in the fund. By the time Wall Street decides to get on board, its share price could quickly scoot back up above $70.

You can use this fund as a speculative bet on the future direction of the pandemic if you like. However, I prefer to think of it as a hedge to protect the rest of your stock portfolio against COVID-19.

If the virus fizzles out, the rest of your portfolio should participate in the future growth of the stock market. But if COVID once again shuts down the economy, this fund may be one of the few investments to gain ground.

Either way, it strikes me as being a sensible way to defend against a sudden rise in COVID-19. Hopefully, my personal experience with the virus was just an anomaly. But if it is not, then we may not have seen the last of it.

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