The world’s financial markets can be volatile and unpredictable entities, while they also remain shrouded in a number of misconceptions that may deter aspiring investors from participating.
However, the modern financial markets are increasingly diverse, both in terms of investment vehicles and the range of asset classes on offer. This means that there are always opportunities for investors to profit in 2021, even as markets and particular assets continue to depreciate.
In this post, we’ll delve a little deeper into this, while asking whether or not you should consider investing in 2021?
What are the Best Opportunities in 2021?
There’s no doubt that 2020 has been an incredibly volatile time for the world’s financial markets, with major indexes such as the Dow Jones having experienced record highs and lows in the wake of the coronavirus crisis.
Such volatility has been underpinned by the performance of individual markets, as while industries such as aviation and travel and tourism have been decimated by the pandemic, others having seen exponential growth as consumer behaviours have been compelled to change.
Take tech and healthcare stocks, for example, which have seen huge spikes in 2020 and provide genuine opportunities for investors to profit.
This trend is likely to continue too, even though many tech stocks in particular have endured something of a correction during the fourth quarter. This is best borne out by the performance of Zoom, which reported earnings growth of 355% during the second quarter of 2020 and saw its share value increase incrementally, before embarking on a slight downward trend at the beginning of Q4.
However, its current price of $406.01 remains considerably higher than its value of $68.72 reported on January second of this year, so there’s still a small window of opportunity in which to profit as the New Year gets underway.
This trend is also prevalent among healthcare stocks, while sectors such as aviation are also poised to rebound significantly next year and offer an opportunity for investors to profit
Risk and Reward – What are the Asset Classes?
Of course, there remain risks when investing in any sector or market, particularly when you consider the volatile nature of the global economy and the omni-present risk posed by the coronavirus.
For example, a new strain of Covid-19 has recently been discovered in the UK, with this prompting further and more severe lockdowns while impacting heavily on the economy and individual stock valuations.
This risk has to be factored into any investment, particularly if you choose to target the type of undervalued shares or assets that exist in heavily impacted industries. It also has the innate potential to impact on currency valuations, as the continued economic harm caused as a result of the coronavirus will force governments to slash their base interest rate and decrease the demand for currencies amongst overseas investors.
While the combination of these factors should help to inform your trading strategy in 2021 (particularly in terms of your preferred assets and the best markets to trade), the socio-economic challenges posed by the coronavirus shouldn’t discourage you from investing in 2021.
In fact, the strained economic climate will continue to present opportunities to investors as the New Year gets underway, whether you choose to speculate on the performance of depreciating currencies or target devalued stocks that are forecast to rebound.