Why I Didn't Jump on the Coronavirus Vaccine Stock Bandwagon
When the coronavirus outbreak exploded last year, it quickly became clear that mitigation measures like social distancing just weren't getting to cut it. After all, within the absence of completely locking down nations across the planet, there were just no thanks to containing COVID-19 to the purpose where it could taper off. Rather, health experts made it pretty clear that we'd need vaccines to dig out of the pandemic. And now, one year later, there are several viable candidates on the market, and shots are going into people's arms at a gentle clip since the beginning of 2021.
At several points later year, I used to be tempted to urge a bit of the vaccine stock action by buying shares of Pfizer (NYSE: PFE) or Moderna (NASDAQ: MRNA). But here's why I didn't.
It's all about sticking to a technique
Some people aim to shop for stocks they think they will make a fast buck on. But that's never been my approach to investing. Instead, I prefer to follow a technique called buy and hold -- scoop quality stocks with solid growth potential and hold them for several years with the hope that in time, they'll gain value.
At an equivalent time, I prefer to form sure I'm invested during a diverse mixture of stocks. That way, I'm not putting all of my eggs in one basket -- if one segment of the market takes successful, my entire portfolio won't tank directly.
It's these very principles that prompted me to avoid buying vaccine stocks. While Pfizer may be a company I think has growth potential, I didn't need it in my portfolio. The reason? I already owned shares of Johnson & Johnson (NYSE: JNJ) well before the pandemic.
Now one thing I prefer about both Pfizer and Johnson and Johnson is that they are not just coronavirus vaccine makers -- both are putting out several pharmaceutical products for years. But since I owned Johnson and Johnson, I didn't feel the necessity to feature what I felt was a comparable pharmaceutical stock into my personal mix, then I stayed away.
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Now let's talk Moderna. Unlike Pfizer and Johnson and Johnson, Moderna hasn't been around that long -- it had been formed in 2010. And if I'm being honest, the name hadn't even crossed my radar until its coronavirus vaccine formula started getting heavy media coverage.
At that time, I used to be both tempted and intrigued. But I ultimately stayed away for one reason -- I'm not convinced Moderna has great growth potential. Sure, it's its coronavirus vaccine going for it, but it doesn't have a strong pipeline of revenue-driving drugs like a number of its counterparts. And while I recognize that there are any profits to be made within the coronavirus space, at some point, I'd wish to hope there won't be a requirement for those vaccines.
Even if coronavirus vaccines do become the new flu shot -- something you're taking per annum -- in time, more players could enter that field. then while I feel Moderna has the potential to be very profitable within the near term, I'm not convinced it's positioned for long-term growth.
Refusing to veer
Some of the people that know me well would be quick to call me stubborn -- once I get a thought in my head, I persist with it. Such is that the reason I didn't find yourself buying coronavirus vaccine stocks despite the potential upside involved. I'm comfortable with the investing strategy I've set for myself, and that I do not feel the necessity to veer off-course. And while I'm wanting to get an actual coronavirus vaccine, I do not feel that I'm missing out on much by not having bought vaccine stocks.
This article represents the opinion of the author, who may afflict the “official” recommendation position of a jester premium consulting service. We’re motley! Questioning an investing thesis -- even one among our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
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