The rise of COVID-19 marks the 2020 stock market. Because of the pandemic, the economy experienced an excruciatingly quick decline. While the market has broadly recovered since then, many people wonder what the market will look like in 2021. Anosh Ahmed has been part of the business world since he was a teenager and had a unique look at the emerging economy.
The Impact of The Pandemic
Some experts are comparing the 2020 stock market to 2009. Since March 23rd, trading activity is very similar to the index’s price movements over a decade ago. Because of the rallying markets from March, this historical performance is worth noting alongside the rest of this unusual time.
Anosh Ahmed noticed the initial change in the market once COVID-19 took hold. When social distancing regulations became customary, business life drastically changed. Employees lost their jobs while certain companies went out of business. In addition to the transformation of brick and mortar businesses, the tech business also noticed changes.
During the pandemic, tech stocks significantly increased. Software that helped individuals work from home quickly became popular and indoor entertainment and schooling options. Video conferencing services have skyrocketed since the start of social distancing.
The amount of first-time investors has increased through this period of time. Anosh Ahmed has seen an influx of new investors even as stock prices plunged. Younger traders without much experience in the field started to buy stocks in hopes of substantial returns.
2021 brings new opportunities, especially since the advancements made throughout the pandemic. While certain aspects of this new year are positive, there are risks to future investments.
The Future of The Stock Market
2021 looks promising for several reasons. With the continuation of vaccines available, earnings are expected to rebound. The 2021 stock market is predicted to have significant shifts in market leadership.
Many analysts expect the global economy to continue growing throughout 2021. Since the pandemic has had a global effect, this rebound is likely to ripple across almost all countries. In addition to large firms contributing gains, small-company stocks will also be key players in this year’s market advancement.
New investments are available. Reflecting on current policies, renewables are thought to be highly profitable. Alternative fuel sources that provide lucrative returns involve solar and wind companies. Since the start of a new presidency, the shift in focus includes carbon neutrality. Clean energy looks promising for investors in 2021.
Unlike the environmental priorities, the tech industry has taken a hit. A burn-out is predicted for this following year from looking at history’s growth rate data. The tech industry has had a 40% growth over the past two years. According to statistical analysis, this growth rate has only been achieved eleven times since 1926. Out of these eleven times, ten of them ended after only two years.
Playing It Safe
For those who are worried about sudden plunges in the stock market, there are certain staples. These companies are extremely large and have typically remained stable throughout significant adjustment times. Consumer staples are often a secure choice for individuals who fear a recession or want minimal risk when investing.
Some of the most popular consumer staples include: Walmart, Pepsico, Costco Wholesale, Procter & Gamble
Consumer staples have consistent demand regardless of regular market cycles. These dividend investments can also benefit from a growing economy. Other industries that are widely considered safe include the industrial sector and the communications segment.
Industrial investing is a balanced way to play the market. This sector has consistently outperformed in the market. The top United States-traded companies for this sector include manufacturers and brands such as Honeywell, United Parcel Service, and Union Pacific. Because of their generous dividends, this is an attractive option for those who want a stable investment.
Investing In The Market
For first-time investors, there are several factors to consider when just starting. Regardless of what year it is, the importance of knowing value is key.
By choosing individual stocks, each sector can be studied for individual growth rates that impact the overall market. This may take time and research or a professional advisor. By choosing individual stocks, this can give an investor more control over when and how to manage stocks, but it may prove more laborious than hiring an expert.
Having an expert handle the process is also an option. This can be done in several different ways. Certain software programs can help as well as additional online tutorials. An in-person professional can assess individual priorities while understanding what works best.
In 2021 several technological advancements can help with investment. Online brokerage accounts are one possibility for buying stocks and funds. A Robo-advisor account also now exists. This allows investment management to be handled by a software system that can be programmed to advise individuals.
The Market Is Changing
2021 has brought several critical changes to the market. Since the vaccine, the economy is once again picking up. Companies across the spectrum are coming back with more shops opening and the decrease of necessary social distancing precautions. The political change has also impacted what stocks to focus on. By concentrating on environmental avenues and energy investments, this year will likely be a lucrative one.