‘Courage taught me no matter how bad a crisis gets … any sound investment will eventually pay off.’ — Carlos Slim Helú
In a year when there has been scant good news, we at Infinity love this positive quote about investing. It’s from a man who is not nearly as well known around the world as fellow billionaire investor Warren Buffet, but clearly knows his stuff when it comes to investing: Carlos Slim Helú. The über rich Mexican topped Forbes Magazine’s rich list from 2010 to 2013 and has an estimated net worth of US$58.2billion.
If your financial situation has taken a battering in 2020, don’t despair, better times are coming. The quote acknowledges that all investing will involve setbacks, including some big ones, but if your portfolio is based on sound investment principles, over the long term you will come out on top.
A reminder of those sound investment principles in a nutshell: a diversified portfolio of investments and a long investment horizon.
As this unprecedented year comes to a close, let’s take a quick look at 2020’s winners and losers and what possible trends might be coming in 2021. The might is stressed because, as this year has taught us, life is full of surprises and predicting what different asset classes will do in the short term is nigh on impossible.
2020s winners and losers
2020 has seen a major shift in the way we work and consume and this has hugely impacted the stock market. The years ups and downs have highlighted stark differences in fortune in different sectors as a result of the pandemic.
It’s not hard to guess that the year’s biggest winners were technology stocks. As we all locked down and turned to tech, companies such as Netflix, Facebook, Apple, Amazon and Microsoft, dubbed ‘stay at home’ stocks, saw share prices rocket.
The online shopping sector has, unsurprisingly, also thrived with eBay, Etsy and Paypal amongst the e-commerce winners expected to continue to prosper in 2021.
Conversely, as we all know, the hospitality, leisure, transport and travel industries stocks bore the brunt of Covid-19 restrictions and many corporate giants in these sectors, particularly aviation, have been brought to the brink. It remains to be seen how these industries will fare in 2020. As vaccines start to be rolled out we will slowly get a clearer picture of whether certain consumer lifestyle changes are here to stay or whether we will revert to our old habits.
Old traditional stocks such as oil and consumables have also suffered in 2020 due to falling demand as many parts of the world ground to a standstill in April and May. Demand has risen since but the economic implications of the pandemic continue to cast a shadow on these industries as we move into 2021.
Gold is the traditional safe haven investment which many people turn to when stock markets are turbulent and this year was no different. Gold prices surged in response to the stock market tumbling when the pandemic took hold early in the year triggering predictions that the asset would reach record highs of $,3,000 per ounce. Gold prices however fell back sharply once drug companies Pfizer and BioNTech announced the effectiveness of their vaccines in November. Gold prices have since stabilised and those price predictions from earlier in the year seem like hyperbole for now.
Your investment strategy for 2021
If we had to sum up the 2020 markets in one word it would be volatility. And the outlook for 2021 is far from certain. Will the recovery be V-shaped, U-shaped or W-shaped, with a double-dip recession? No-one can tell and, in all likelihood, this will vary from country to country, region to region and sector to sector.
So what should your investment strategy be? Well, at the risk of sounding boring, we recommend the same three-point strategy that we always do:
- Stay invested
- Make sure your investments are diversified
- Look to the long term
If you would like assistance with any of these points, we’d be delighted to help. Get in touch and we’ll put you in contact with an adviser near to you.
All of us here at Infinity wish you a happy holiday season and we sincerely hope that 2021 brings health, wealth and positivity for you all.
A leading provider of expat financial services and wealth management services across Asia.