It’s now time for investors to review and top up their portfolios in both value and growth stocks, ahead of a stronger-than-forecast global economic rally.
Here we are, just three months into 2021 and stock markets are already looking hugely different from last year.
With central banks in Asia and around the world supporting financial markets, the first half of this year will see more radical change for the markets.
Looking back 12 months, the panic and uncertainty surrounding the Covid-19 crisis resulted in a major and sudden global stock-market crash. Yet now, a year on, and thanks to historic stimulus packages from governments across the globe, mass Covid vaccine rollouts, easy money from central banks and all-time high levels of pent-up savings and demand, a major economic recovery is in the cards.
Indeed, it’s my view that we will see a far more robust global economic rebound than expected in 2021, especially in developed economies.
In fact, we could see the fastest growth in decades.
Evidence for this has been seen by the world’s de facto central bank, the US Federal Reserve, withdrawing three lending schemes to finish at the end of this month as scheduled because of a lack of use.
Therefore, with this potential economic boom looming, where should savvy investors be investing?
There is a great deal of chatter around the “rotation” phenomenon. This is a move into financial, industrial and energy stocks for example, sectors that could benefit from increased inflation and an improving economy, and away from tech stocks that experienced a boom during prolonged virus-fueled lockdowns.
Nevertheless, investing should never be an either/or scenario, and investors should always include value and growth stocks in their portfolios.
Naturally, after the pandemic, it’s extremely likely certain lockdown habits will become permanent, such as working from home more.
Yet we’ll soon be traveling again and attending public events, and we’ll also be much more aware of the environment and hygiene procedures.
As such, value stocks are enjoying a revival, but nobody can really believe that major firms such as Amazon, Google and Tesla are not also companies of the future.
Consequently, as always, the best way for investors to sidestep risks and make the most of the inevitable opportunities is via sufficient portfolio diversification.
Indeed, just three months in and the stock markets are already very different this year compared with 2020.
So, in order not to miss out on the major economic rally, investors in Asia and around the world should top up their portfolios and ensure they are sufficiently diversified sooner rather than later.
Nigel Green founded deVere Group in 2002 from a single office in Hong Kong after discovering a niche market for expatriates in the financial services sector. Since then, it has grown to become one of the largest independent financial advisory organizations in the world with offices and clients across the globe.