The year 2020 provided one of the biggest challenges in a lifetime. But for those who remained faithful to their investment strategy it also turned out to be an extremely rewarding year! The broad economy may have been in dire straits, but certain sectors of the financial markets experienced a boom year. The worst economic crisis since the Great Depression only knocked the financial markets off their stride for a brief period. The record-breaking crash in March 2020 was followed by a record-breaking recovery for the balance of the year. The Nasdaq 100 was up no less than 46% for the last year!
What does 2021 hold for Investors?
Monetary and fiscal policy in the West remains very loose, primarily because of high unemployment and apprehension about the fragility of the economic recovery. Incoming US President-elect Joe Biden will be inaugarated on 20th January 2021, and will bring a sense of stability and sanity to the world’s largest economy. In Europe, politicians continue to do what they like most: striking deals at the very last moment to excuse the imperfections of their compromises. The UK will remain a satelite of the EU, very much like Switzerland, despite the PR talk about sovereignty and a resurrected empire. China and most of Asia are emerging from the crisis enviably well. But it’s not over yet. The full effects of the Covid-19 pandemic will continue to be felt until the vaccines are fully rolled out and prove their efficacy.
Central banks are expected to continue with their low interest rate policies for a protracted period so as not to jepoardise the fledgling economic recovery. This means good news for quality equity counters. Many analysts believe world markets should be in for two to three years of calmer waters, where global events will begin to heal and return to normality. However, it will be a new sense of normality where the transition to virtual working, shopping, entertaining, and lifestyle would have been greatly accelerated. Geopolitically, the world is continuing to shift from a Western dominated global agenda to a multipolar world. China’s continued rise and Asia’s swifter and more successful handling of the pandemic serve to illustrate this shift. That may very well result in a renewed sense of purpose amongst the global leadership. Issues such as climate change will be thrust to the fore and renewable energy sources will become more mainstream in terms of energy generation and consumption.
On the economic, health, humanitarian and social front, 2021 promises to be better than 2020 in almost every respect. The famed Danish poet Soren Kierkegaard said, “Life can only be understood backwards, but must be lived forwards.”
Activ8 would be more than happy to meet with you to review your portfolio and invetsment strategy. We can meet virtually using a range of video conferencing software to ensure that adequate saftey protocol is observed.
