Predicting the future is a risky and often thankless task, especially in these times of fear, fake news, divided electorates, and rising geopolitical tensions; nevertheless, we will attempt to venture some investment ideas into the coming New year and beyond.
Casting a backward glance at the whipsaw markets of 2020, we saw the S&P 500 drop 33% in March alone as the ramifications of Covid-19 on global growth became worryingly apparent. Only then to rise 66% [almost parabolically] from that March low to reach record-high levels in December on nearly every index.
The already elevated FANG stocks [Facebook, Amazon, Netflix & Google] led the recovery as they were the primary beneficiaries of all the Government lockdowns and quarantine protocols.
Given multiple vaccines are now coming to market and herd immunity is developing among communities, we think it unlikely these sector goliaths will lead the markets higher again in 2021.
January the 20th should see the obviously mentally failing former democrat VP Joe Biden inaugurated as the 46th President of the USA and at 78 years of age, its oldest.
How long he remains in office is the subject of much debate and conjecture given his health issues, and now serious investigations by the FBI of alleged malfeasance leveled at his son Hunter and suggestions that Joe both materially assisted and benefitted.
Maybe a repeat of Trump's Russia Gate but with the boot now on the GOP foot could upset the new administration's early months.
While a Biden Presidency suggests a steady philosophy of a more caring conservatism, anxious eyes will be watching VP Harris, who has a much more radical following and a socialist agenda. So far, appointments to the new administration have reassured markets.
[A sudden change in Presidency would dramatically change that perception]
We suspect the slogan of Biden's incoming administration will be of a 'Time to Heal' as he mouths words of reconciliation from the teleprompter following the profoundly divisive November election that has split America as never before.
Quite what else is presented in his speech from the podium on January the 20th depends very much on who wins the Georgia senate race earlier that month.
An 'anticipated' GOP Senate victory will greatly stymie Joe's proposed higher taxation agenda for wealthy corporations and mega-rich individuals, and consequently, gridlock will ensue. A prospect that would seem to suit Wall Street and many within the investing community as of this publication.
Infrastructure stocks should benefit as federal public spending could be top of the agenda given the continued sorry state of much that has needed repair and renovation for the past 20 years.
It's also a rare issue that both parties could possibly rally behind to kickstart the USA economy from a Covid induced recession to improve airports, roads, bridges, and dams across the USA.
US Concrete [NASDAQ:USCR] & Blackstone [NYSE:BX] are 2 to consider.
As Marijuana use becomes legal in more and more states and given its token appeal to predominantly Democratic voters both for recreational and medical applications, any national law legalizing its use would set the sector alight.
That could only happen near term if somehow the Democrats prevailed in the January Georgia Senate race. Then stocks that represent this industry would find further favor despite having already gained some sizeable investor popularity.
Cresco Labs looks interesting [CRLBF]
Technology involving the ''Cloud and 'Cybersecurity infrastructure' applications are an unstoppable investment theme and should continue to thrive and drive the sector as stocks in the space are the building blocks to the future.
CrowdStrike [CRWD] is a name that is often mentioned despite an already elevated valuation.
Cloud Computing ETF [CLOU] should be considered, as should Salesforce [NASDAQ:CRM], where Berkshire Hathaway took a stake pre its recent IPO.
Finally, with all the Central Bank monetary experimentation of the past ten years, and particularly in 2020 with the unprecedented digital printing of trillions of dollars in response to Covid, it would be prudent to have exposure to some financial insurance in the shape of precious metal mining stocks and/or cryptocurrency should the monetary experiment go seriously awry.
MicroStrategy [MRST] would be our choice in the crypto space given its easy tradability, security, and substantial exposure to the underlying value of BTC and Yamana Gold [NTSE:AUY], which represents a quality mine in the precious metals sector.
Finally, we wish all our readers a Happy Xmas & a Prosperous New Year.