What will be the investing trends for 2021? If you were a person in 2020, then you likely noticed that there was nothing normal about the entire year. In some ways it felt like being in a cartoon, and investors felt that big time.
After the record setting highs of 2019’s stock market, the COVID-19 pandemic and recession brought the market tumbling down… for a matter of minutes… before it unexpectedly sky rocketed back up, leaving many 2020 investors with 20% or 30% gains in their accounts. I ended my year up by over 33%!
While we’ve seen plenty of unusual years in the market, this past one is still among the most unprecedented. What will 2021 bring?
Predictable Ain’t A Thing
There is hardly such thing as “expect” when it comes to the stock market. We want to preface the following points with this.
The stock market is historically guaranteed to make you a good profit IF you are investing over a long period of time (more on that later), but the best that any investor can make is very calculated guesses. There’s no true predicting.
Here’s what we CAN give you.
1. The Time-Tested Stock Rules Still Hold True
When it comes to the majority of your stock investments, they should be diversified across a wide range of stocks. Buying into a diversified fund, preferably managed by a financial expert (or robo advisor: i.e. SoFi, Betterment, Ally, etc.), is the safest and most guaranteed way of making long-term profits in the stock market. This is still true.
In fact, the emphasis should also be on long-term. The more time that you give your stock holdings to sit and grow, the more compound interest will work in your favor. Investors who have invested long term easily survived the big recessions (yes, even the Dot Com bubble and the big recession in 2008) by keeping their money in the market and holding on. Most even thrived.
This tells us that it’s still important to not panic. It’s natural and even healthy for the market to occasionally take big dips, but history also tells us that it will rally back with enough time.
Instead of selling in a panic or being controlled by emotion, calmly wait out the recessions and bear markets. If your funds are diversified enough they will actually take advantage of lower prices and bounce back powerfully when the market goes bullish again.
2. It’s Time To Focus On Post-Pandemic Stocks
One of the most essential truths you’ll see in the stock market is that future potential is a far more powerful factor than current relevance.
At the very beginning of the pandemic it was the perfect time to buy work-from-home stocks (like Zoom), stocks related to unemployment or people searching for work (like Upwork), and take-out/delivery stocks in the food industry (like DoorDash). These stocks exploded, because they were growing in relevance.
The first thing to really halt Zoom’s explosive growth was news that the early rounds of vaccines were proving to be 90%+ successful.
So what’s the flip side of this? It’s time to focus on a post-pandemic world and the stocks that are going to come back. Travel-related stocks, like airlines, hotels, Disney, or AirBnB, are likely to explode with the industry when travel bans finally lift. Pharmaceutical stocks connected to the vaccine too.
“Pandemic themed” stocks, on the other hand, may see a drop.
3. Politics Don’t Matter As Much As People Think
Election years can be turbulent times for the market, with a lot of investors anticipating drastic fluctuations depending on election results.
The real results, though, don’t usually bear that out.
While it’s true that a political leader, or changes in leadership, can have impacts on the economy, it’s actually rare to see any enormous changes in the market. The weeks leading up to an election may see small downward trickles that represent the anxiety and uncertainty of voters, but historically speaking it doesn’t matter much who gets voted in (at least for your stocks).
So as the United States enters a new year with a new administration, it’s pretty unlikely to have a major impact on your stocks.
4. Real Estate: A Seller’s Market?
The 2020 pandemic brought unexpected blessings to home owners (and particularly sellers) in less urban areas. For real estate investors in the farther, less populated outskirts of big cities, 2020 was a gold mine.
Residents of major cities, like New York City, poured by the thousands into country towns, buying up secondary homes or renting apartments/AirBnB’s to wait out the pandemic where there are less people.
This made 2020 a great year to be selling or renting real estate. It will remain to be seen how long this trend will last! In a post-pandemic world, as the fears of sickness subside, many homeowners in the country may burn out on the commute. OR the areas that they have moved to may explode to new levels of development and become a hot real estate market for a long time.
While it could go a few different ways, industry experts expect real estate to continue growing in value for 2021.
5. The Crypto Goldrush
No investing trends for 2021 list would be complete without crypto. At the time of writing this blog post, BitCoin has hit $50,000, and indicators suggest it still has plenty of growing to do.
While “experts” denied the long-term viability of cryptocurrencies for years, there’s now no denying that crypto is here to stay. And it’s a frontier full of extremely lucrative opportunity!
While the price of BitCoin skyrockets, other (often fundamentally better) coins are also building momentum. Coins like Ethereum, LiteCoin, Stellar, Cardano, Polkadot, Chainlink, and many others, have seen explosive upward growth.
The time to get in on smaller coins with bright futures is absolutely right now. Many cryptos are dirt cheap right now, leaving room for multiple 1000x of growth. Join a crypto exchange like CoinBase, Crypto.com, or Binance to get started (and remember to do your research on sites like Coin Market Cap!)
Keep Doing Your Homework
The past year has been hard, yes, and taken it’s toll. But it’s also been an incredible time for investors, and made millionaires of hundreds and hundreds of people!
Now is the time to take advantage of the opportunities in the market. Keep an eye on our blog for more investing tips and keep learning! Smart money moves now could change your life!
Want to know more about what investments to start using ASAP? Check out some of my blog posts about the stuff I’m using to make money!