Just getting started:

After the Dow Jones hit the symbolic 30k point in November and had its best month since 1987, is it time to take some risk off the table?  While it would make some sense to do so, many will argue stock markets are not done yet.  There only seems to be good news at the moment and it is lifting market sentiment, despite lockdowns and record number of infections and deaths.  With the US elections in the rear view mirror, investors are looking ahead to 2021 and the economic recovery that will ensue after vaccines are rolled out.  In the short term there are also high hopes that the US will pass a stimulus deal to help those most affected by the pandemic, a billion dollar package.  Finally, with record low interest rates for at least another couple of years, stock markets are the place to be.

At the peak of the bull run in August, following the shortest bear market back in March, one sector was single handedly leading the charge, the tech sector.  All of the other sectors were barely above water and most were still in negative territory.  Think energy, leisure, travel and hospitality.  Well these stocks should now be poised to come back to life as economies open up and we should see a rotation away from the favorite tech sector.

Still this doesn’t mean that the stocks that benefited from the lockdowns will necessarily suffer from now on.  A number of surveys show there will be an after COVID regarding many things and especially office work.  People have become accustomed to working from home and want to spend more time at home from now on.  Companies have also found that it is cheaper and just as efficient to have an online meeting rather than traveling and staying at hotels.  These latest developments bode well for many of the winners of 2020.

We must not forget that outside of the stock market effervescence, there are a global recession, high unemployment and companies going bankrupt.  However, some parts of the world like Asia are already on the path to strong recoveries and ultimately that is what investors are looking at for 2021 and beyond.  From the hardest hit sectors not all companies will recover, there will be winners and losers, bankruptcies, acquisitions and mergers.   That is why regardless of the optimistic sentiment surrounding stocks one must choose wisely.  Overall though, global stock markets are expected to rise next year and as bizarre as it may sound, it will be as a result of the pandemic and the tumultuous year that 2020 has been.