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Lets start with what should be a part of everyone's portfolios
1. ARTIFICIAL INTELLIGENCE
‘Many experts believe that AI will revolutionise the commercial world with long-term social and economic impacts that could be comparable to those of the railways, the internal combustion engine or the telephone,’ he said.
2. AUTOMATION
Businesses are keen on automation to reduce costs and improve productivity – a key issue for economies.
3. E-COMMERCE
Online shopping has transformed the retail landscape yet the theme remains in its infancy
It’s a structural investment theme encompassing multiple sectors and a transformative investment opportunity for investors.’ It is partly an investment in logistics service providers and partly an investment in technology.
4. ENVIRONMENTAL SOLUTIONS
Two reasons:
1. there is a problem in terms of climate change and the sustainability of our planet for future generations and we really need to do something about it; and
2. governments have recognised this and are empowered to act.
5. HEALTHCARE
Covid-19 has intensified people’s awareness of health issues and of the benefits of a healthy lifestyle, which we expect to have a lasting effect, Aside from the pandemic, the aging global population provides a solid and predictable long-term growth trend in the provision of healthcare products and services, as both governments and individuals pour money into tackling the problems that accompany a large elderly population. Obesity is a growing issue and one that offers good growth potential from an investment perspective.
6. RENEWABLES
The opportunity stems from the global need to address climate change and decarbonise our economies – two themes that have gained significant momentum and no doubt will remain prevalent over the coming decades.
A reflection on 2020. Its the tech story
The benchmark Technology Select Sector Index (XLK) has generated a total return of 25.04% year to date, compared to a YTD gain of 4.05% for the SPDR S&P 500 ETF Trust (SPY), as of market close November 2.
The tech sector is benefiting from the pandemic as quarantined consumers shop, work, learn, play, and socialise at home. This trend will continue next year and beyond. We face an economic rebirth in 2021, as disruptive innovations become entrenched as the status quo.
Airlines, hotel chains, restaurants, movie theatres, cruise ships, theme parks, and millions of small businesses are getting clobbered by the coronavirus pandemic. We're witnessing massive unemployment and a wave of personal and corporate bankruptcies. "Big Tech" companies? They're doing just fine, thank you.
Despite the severe recession and resurgent pandemic, the biggest players in the technology sector are enjoying increased demand.
Amazon (NSDQ: AMZN), Apple (NSDQ: AAPL), Alphabet (NSDQ: GOOGL), Microsoft (NSDQ: MSFT), and Facebook (NSDQ: FB) all posted significant year-over-year revenue growth for the first nine months of 2020 ending September 30 (released by research firm Statista on November 2):
Combined, these five tech giants comprise more than 20% of the weighting of the S&P 500 Index. You could say that the S&P 500 is really the S&P 5. The rising stock prices of this quintet have accounted for a disproportionate share of the stock market's rally since late March. That means their shares are pricey and might dip in the near future, but a correction would be healthy and set the table for prolonged future gains.
The transition to the cloud is among the biggest tech trends afoot today. By using data storage and IT capabilities that are centralised and located off-site, companies are able to greatly reduce their processing costs through efficient outsourcing. During the COVID-19 pandemic, we've reached an inflection point whereby the cloud pervades all aspects of our personal lives and not just corporate processes.
The pandemic also has accelerated adoption of e-commerce, mobile payment services, telehealth, video teleconferencing, virtual/augmented reality, and robotics. Tying these industries together is the roll-out of 5G wireless.
And how does Asia look
Asia has done a good job in 2020. Whether their success is attributable to an earlier cultural acceptance of wearing face-masks, better compliance with authorities, or even governments more willing to take draconian measures to contain the spread, they are no doubt doing far better than the US in terms of battling COVID. For example, Taiwan only has about 550 confirmed cases and seven deaths out of a population of more than 23 million.
Asia's success means that the region will indeed lead the way out of the global recession. Something in particular to watch is China's Belt and Road Initiative, also called the "New Silk Road."
This ambitious plan aims to link more than 60 countries, most of which are developing economies, in not only Asia, but also Africa, parts of Europe and the Americas in a massive trade network.
China has long been a top commodity consumer thanks to years of modernisation and infrastructure build out, but now heightened construction activity will be spread through developing countries.
We are looking at likely many trillions of dollars to be spent on commodities for the Belt and Road Initiative over the next decade or two. That bodes well for the commodities market and commodity producers. Higher commodity prices mean higher inflation and that doesn't benefit us in the West. But potentially high inflation ahead is another reason to invest in gold.
What steps can investors take now to grow / protect their portfolios?
1. Its all about your risk profile and timeframe - talk to your adviser!
2. The Gold story - for safety
For investors who don't already own gold ETFs or gold mining stocks, it's a good idea to buy some. The yellow metal tends to outperform when there are deflationary or inflationary forces. Gold also makes for an excellent long-term investment, not just as a short-term hedge against the market.
3. The energy sector - for the adventurous
The energy sector was badly hit - it could be the growth story for 2021
Among the industries that have suffered the worst during the outbreak, which ones currently provide appealing potential value in 2021?
While they likely won't have the fastest recovery among beaten-down stocks, energy stocks may have among the highest potential upside from here.
Even the biggest oil companies are booking big losses, cutting dividends, selling assets, and writing down assets. But I wouldn't count out oil. Despite all the hype surrounding electric cars (EVs) eliminating the need for gasoline, I can't imagine a world in which oil still doesn't play an important role, at least not in my lifetime.
Even if EVs do proliferate, they won't replace the entire fleet in the world, so oil will still be used for transportation. Besides gasoline, oil also has many industrial applications. If you have patience to wait, there are quality energy stocks trading at historically low prices. Crisis tends to weed out the weak and leave the strong to thrive once conditions improve.
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Regards
The Just Service Client Service Team