For investors, the year 2020 has been much more than a roller-coaster ride! The COVID-19 pandemic outbreak also had an impact on the Great Recession and the famous Dot Com Bubble. This experience came with a massive lesson for the investors in 2021. That is, estimating the future of investing is a challenging game.
Despite that, it is impossible to look through the various trends that can impact investors in 2021. Paul Haarman shares some of the essential investing trends that investors should know.
- The impact of Biden
January was all about Biden’s administration. There were many news updates about Biden’s plan for increasing the taxes on the affluent people and its probable effect on the stocks. However, the market responded well to Biden’s victory and carried on to rally election outcomes that started to get clear in the coming days.
In the meantime, as Wall Street at the start was hoping for the blue wave, the recent performance of the market has shown that it prefers gridlock. It means that the market will respond well irrespective of Georgia’s run-off United States Senate races.
- The COVID-19 vaccine will increase pharma stocks
If the pharma industry can manage to tackle the COVID-19 pandemic by 2021, it will be a victory for science. The public organizations involved in this initiative will get rewarded. There will be some obvious winners, like Moderna and Pfizer. The organizations working on therapeutic drugs such as Regeneron will also be at an advantage.
There might be the less obvious winners as well. For instance, disseminating the vaccine will need a substantial logistic initiative. Certain vaccines will need a below-freezing transport. Hence, the firms which provide cooling technology will also benefit.
- There will be constrained demand for travel stocks
Various other sections will jump, provided the world regains normalcy in 2021. The pending demand for travel can generate a gold rush for the long-pending airline stocks, cruise lines, and hotels. Also, the increasing economic activity will work wonders for the hard-hit tourist cities around the globe. The question is how much of this will happen! According to Paul Haarman, the early vaccine success might indicate close to zero pandemic cases in the United States before summer. And this alone can add approximately 1 to 1.25% to the U.S GDP.
- The slowing down of tech stocks
Numerous analysts have estimated a slowdown of the tech stocks that experienced a great year back in 2020. According to the latest trends, the long bull market for tech stocks will eventually end. The factors that might be playing out in 2021 comprise the potential for a messy antitrust lawsuit against Google and various other technology giants. It is not clear how the Biden administration will manage the Trump government’s lawsuit against Google. However, there is very little doubt that state lawyers will carry on to pursue the lawsuit against the giant tech firms.
These are a few of the important trends related to investing that investors should know in 2021.