Zoombies I, II and (maybe) III
The story of how I Zoom-ed to Heaven, Hell, and Back Again
In 2018 Morningstar replaced its legacy video conferencing system with a newfangled system called Zoom (ZM). It was immediately clear that Zoom worked far better than its predecessor. In April 2019 I did a little bit of research and learned that Zoom’s corporate clients numbered in the hundreds. Hundreds?! I thought that every big company in America should be using this product. I read a research report from a big brokerage firm (Morningstar was not yet covering the stock) and decided to dip my toe in the water with a purchase of 200 shares at $67.
Most stocks plummeted when the COVID-19 bear market hit in March 2020, but Zoom merely dipped, then took off like a rocket as it became clear white-collar workers would have to operate from home for an extended period. COVID was a perfect storm for Zoom.
Meanwhile, the bargain hunter in me said, “Zoom is great, but some stocks I’ve wanted to own are now cheap and Zoom looks expensive based on Morningstar’s analysis.” So on March 12, 2020, I sold Zoom at $113. I used the proceeds to buy shares in iShares Russell 2000 (IWM), a small-cap index ETF.
By October ZM’s price had risen to $559. I was kicking myself. How had I blown it on a once-in-decade pick—which I had gotten right at first? I kept telling myself that I’m a long-term investor and it would be OK. Zoom would come down to earth…
