How COVID-19 Has Changed the Way I Invest

By Stephen DuFour, portfolio manager of Fidelity® Focused Stock Fund

The sharp curtailment in economic activity in March and April forced me to look past near-term earnings growth and consider what earnings could look like when we get to a new normal. For example, right now some hospitals are not doing elective surgeries. But that doesn’t mean those procedures won’t happen later in the year.

While I’ve tried to stick to my five screening questions, I’ve had to make some adjustments. For instance, if I wanted only companies that could grow revenue, I would have to own 100% tech and health care. Instead, I’ve also invested in companies elsewhere that are not growing revenue in this environment.

I’m still avoiding businesses that have bad balance sheets or are losing money. But it’s hard to figure out what better relative earnings growth looks like when the market’s earnings growth is so uncertain. I’m also looking at companies with P/E ratios that seem expensive because the earnings are so depressed, but could fit my range once their earnings pick up.

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