The Motley Fool

Forget Bitcoin! 5 stock sectors screaming higher right now

Image source: Getty Images.

At around $9,640, Bitcoin is more than 50% higher than its dip at the beginning of March. But I wouldn’t chase the price up by speculating on the cryptocurrency now.

All kinds of markets have been shooting up since the coronavirus crash. For example, look for proof in the prices of oil, gold, copper, iron ore, the FTSE 100 index, and the Dow Jones Industrial Average.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Almost everything is going up

In some ways it all seems nuts. Some of those markets are ‘supposed’ to be counter-cyclical to each other. Such as gold going up while shares go down, and oil price falls boosting share prices.

However, this kind of exuberance almost across the board does tend to happen when markets have experienced a sudden and dramatic shock. For example, with the credit crunch in the noughties, all markets plunged seemingly together. There’s good logic in that. Nobody knew what would happen, or how badly events would affect individual markets, so there was a tendency to just sell everything.

A similar thing happened when the coronavirus hit. Investors first reaction was to dump almost everything and that’s why we saw the stock market crash along with many other markets.

Perhaps it’s rational for many markets to rise now. After all, we know more about how lockdowns are lifting and how economies are sputtering back into life. But I can see one potential problem. Rising markets tend to beget rising markets. Investors see the rises and start panic-buying for Fear of Missing Out (FOMO).

FOMO-buying will run out of steam

But FOMO-buying tends to lead to irrational buying divorced from the underlying value of a market, and it won’t last forever. Indeed, just as panic-selling can cause shares and markets to undershoot reasonable valuation on the downside, panic-buying can cause an overshoot of reasonable valuation on the upside.

And that makes markets such as Bitcoin look vulnerable. Because of a dearth of fundamentals, it’s hard to pin a fair valuation to Bitcoin. So speculation alone is probably driving the price. An overshoot looks practically assured to my eyes. And I wouldn’t want to be holding Bitcoin when the buying runs out and the reversal occurs.

A mixed stock market

However, the stock market is a bit more mixed. Some sectors are clearly struggling, such as travel, hospitality, airlines, and other cyclicals. It’s a stock-picker’s market and even Warren Buffett has turned his back on the airline companies and sold out of his holdings in the sector.

I wouldn’t touch bank shares with a bargepole either. But as Jim Cramer pointed out recently, some sectors are roaring ahead and there’s sound logic behind their advance in a world with Covid-19. My top five sectors, which I reckon are well-stocked hunting grounds, are healthcare, IT, food and consumer staples, drinks, and technology.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US $12.3 TRILLION out of thin air…

And if you click here, we’ll show you something that could be key to unlocking 5G’s full potential...

It’s just ONE innovation from a little-known US company that has quietly spent years preparing for this exact moment…

But you need to get in before the crowd catches onto this ‘sleeping giant’.

Click here to learn more.

Kevin Godbold has no position in any share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

The renowned analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.