Investing in 2021

Exclusively for clients of Advisory firms in the Just Service Global network.

Source: Just Service Global

Are we in for a recovery boom? With vaccines being distributed (to those countries who can afford the cost) most commentators believe that the second quarter of this year will start to see more confidence in the markets and most importantly more confidence from investors that the world dodged a bullet. If history is any indication the 1918 Spanish Flu pandemic was followed by a bull market in the 1920s. Hence, it is possible we will see an extended bull run as a result of the pandemic recovery, along with continued support by government and central banks to boost economic activity (through printing more money and keeping interest rates low). Further to our comparison with the 1920s is that new technologies also helped the boom with examples like electricity, the automobile, the telephone, radio, consumer appliances et cetera. These technologies played major roles in stimulating growth which led to rising profits and equity prices-until it abruptly ended in 1929. The general view is the global economy will strengthen in 2021 as the pandemic winds down. Most commentators predict inflation will remain low for the next 2 to 3 years. As long as interest rates stay low there is no real inflation risk and is thus positive for investment markets. Our view on asset classes and themes for the year ahead: What is likely to outperform:

• small to medium size listed companies are likely to outperform the big names having underperform in 2020.

• financials (driven by bank automation) are likely to have a positive year

• commodities: there is likely to be some recovery and demand for commodities (gold, silver, oil and metals in particular). Consumer confidence has recovered in China

• crypto currencies and in particular Bitcoin likely to continue to trend positively due to limited supply (but very volatile)

• technology sector should continue its positive run with biotech, clean energy ("sustainable") possibly outperforming. The mega tech companies such as Facebook, Apple, Amazon, Netflix and Google are likely to remain strong. Society will continue to communicate, work, shop and educate more remotely than ever before. Technology will continue to assist in this transformation. For example artificial intelligence, robotics, block chain and even 5G. The e-commerce sector represents the transition from traditional in person sales to online sales accelerating the transition from traditional brick and mortar shopping to online commerce

• the energy sector in general was oversold and may see some recovery this year

• emerging markets are likely to be reasonably strong with expected Chinese growth. China is in full throttle mode supporting the development of the country's new booming new energy market particularly in automobiles. Emerging markets to play catch up particularly Asia

• China "new economy" sector is likely to have a strong year

• Infrastructure and clean energy technology is expected to be in demand continuing demand 2021 along with health technology innovation

• specific hedge fund strategies such as long short funds ( and are very important for hedging any portfolio)

• ESG (Environment Social Governance) investing - sustainable energy is likely to go mainstream. Helped by the Biden win in the US there is major growth expected in the ESG orientated strategies

Despite the positive comments above all investors should be aware the market is high in comparison when looking at past Price-to-Earnings ratios. The Shiller price-to-earnings (P/E) ratio is a P/E ratio based on the average inflation-adjusted earnings from the previous 10 years. Over 150 years of history, the Shiller P/E ratio for the S&P 500 has an average of 16.8. Right now, the Shiller S&P ratio for the S&P 500 is 34.5 - double its historic average. And what is likely to underperform:

• the US equity markets is likely to underperform other major markets

• the US dollar is likely to weaken

• fixed interest investments continue to not be attractive aside from inflation protected securities and funds holding short-term securities

For all enquiries email info@justserviceglobal.com Regards The Just Service Client Service Team

Where To Put Your Money In 2021

Lets start with what should be a part of everyone's portfolios

1. ARTIFICIAL INTELLIGENCE

‘Many experts believe that AI will revolutionise the commercial world with long-term social and economic impacts that could be comparable to those of the railways, the internal combustion engine or the telephone,’ he said.

2. AUTOMATION

Businesses are keen on automation to reduce costs and improve productivity – a key issue for economies.

3. E-COMMERCE

Online shopping has transformed the retail landscape yet the theme remains in its infancy

It’s a structural investment theme encompassing multiple sectors and a transformative investment opportunity for investors.’ It is partly an investment in logistics service providers and partly an investment in technology.

4. ENVIRONMENTAL SOLUTIONS

Two reasons:

1. there is a problem in terms of climate change and the sustainability of our planet for future generations and we really need to do something about it; and

2. governments have recognised this and are empowered to act.

5. HEALTHCARE

Covid-19 has intensified people’s awareness of health issues and of the benefits of a healthy lifestyle, which we expect to have a lasting effect, Aside from the pandemic, the aging global population provides a solid and predictable long-term growth trend in the provision of healthcare products and services, as both governments and individuals pour money into tackling the problems that accompany a large elderly population. Obesity is a growing issue and one that offers good growth potential from an investment perspective.

6. RENEWABLES

The opportunity stems from the global need to address climate change and decarbonise our economies – two themes that have gained significant momentum and no doubt will remain prevalent over the coming decades.

A reflection on 2020. Its the tech story

The benchmark Technology Select Sector Index (XLK) has generated a total return of 25.04% year to date, compared to a YTD gain of 4.05% for the SPDR S&P 500 ETF Trust (SPY), as of market close November 2.

The tech sector is benefiting from the pandemic as quarantined consumers shop, work, learn, play, and socialise at home. This trend will continue next year and beyond. We face an economic rebirth in 2021, as disruptive innovations become entrenched as the status quo.

Airlines, hotel chains, restaurants, movie theatres, cruise ships, theme parks, and millions of small businesses are getting clobbered by the coronavirus pandemic. We're witnessing massive unemployment and a wave of personal and corporate bankruptcies. "Big Tech" companies? They're doing just fine, thank you.

Despite the severe recession and resurgent pandemic, the biggest players in the technology sector are enjoying increased demand.

Amazon (NSDQ: AMZN), Apple (NSDQ: AAPL), Alphabet (NSDQ: GOOGL), Microsoft (NSDQ: MSFT), and Facebook (NSDQ: FB) all posted significant year-over-year revenue growth for the first nine months of 2020 ending September 30 (released by research firm Statista on November 2):

Combined, these five tech giants comprise more than 20% of the weighting of the S&P 500 Index. You could say that the S&P 500 is really the S&P 5. The rising stock prices of this quintet have accounted for a disproportionate share of the stock market's rally since late March. That means their shares are pricey and might dip in the near future, but a correction would be healthy and set the table for prolonged future gains.

The transition to the cloud is among the biggest tech trends afoot today. By using data storage and IT capabilities that are centralised and located off-site, companies are able to greatly reduce their processing costs through efficient outsourcing. During the COVID-19 pandemic, we've reached an inflection point whereby the cloud pervades all aspects of our personal lives and not just corporate processes.

The pandemic also has accelerated adoption of e-commerce, mobile payment services, telehealth, video teleconferencing, virtual/augmented reality, and robotics. Tying these industries together is the roll-out of 5G wireless.

And how does Asia look

Asia has done a good job in 2020. Whether their success is attributable to an earlier cultural acceptance of wearing face-masks, better compliance with authorities, or even governments more willing to take draconian measures to contain the spread, they are no doubt doing far better than the US in terms of battling COVID. For example, Taiwan only has about 550 confirmed cases and seven deaths out of a population of more than 23 million.

Asia's success means that the region will indeed lead the way out of the global recession. Something in particular to watch is China's Belt and Road Initiative, also called the "New Silk Road."

This ambitious plan aims to link more than 60 countries, most of which are developing economies, in not only Asia, but also Africa, parts of Europe and the Americas in a massive trade network.

China has long been a top commodity consumer thanks to years of modernisation and infrastructure build out, but now heightened construction activity will be spread through developing countries.

We are looking at likely many trillions of dollars to be spent on commodities for the Belt and Road Initiative over the next decade or two. That bodes well for the commodities market and commodity producers. Higher commodity prices mean higher inflation and that doesn't benefit us in the West. But potentially high inflation ahead is another reason to invest in gold.

What steps can investors take now to grow / protect their portfolios?

1. Its all about your risk profile and timeframe - talk to your adviser!

2. The Gold story - for safety

For investors who don't already own gold ETFs or gold mining stocks, it's a good idea to buy some. The yellow metal tends to outperform when there are deflationary or inflationary forces. Gold also makes for an excellent long-term investment, not just as a short-term hedge against the market.

3. The energy sector - for the adventurous

The energy sector was badly hit - it could be the growth story for 2021

Among the industries that have suffered the worst during the outbreak, which ones currently provide appealing potential value in 2021?

While they likely won't have the fastest recovery among beaten-down stocks, energy stocks may have among the highest potential upside from here.

Even the biggest oil companies are booking big losses, cutting dividends, selling assets, and writing down assets. But I wouldn't count out oil. Despite all the hype surrounding electric cars (EVs) eliminating the need for gasoline, I can't imagine a world in which oil still doesn't play an important role, at least not in my lifetime.

Even if EVs do proliferate, they won't replace the entire fleet in the world, so oil will still be used for transportation. Besides gasoline, oil also has many industrial applications. If you have patience to wait, there are quality energy stocks trading at historically low prices. Crisis tends to weed out the weak and leave the strong to thrive once conditions improve.

For all enquiries email info@justserviceglobal.com

Regards

The Just Service Client Service Team

Eyes Wide Open

Dear Client

We at Just Service Global ensure we give regular market updates to all those holding financial products from a range of companies to ensure they are always well informed on both the investment markets as well as the status of their holdings in savings, investment or pension products.

We are currently in uncharted territory within the investment markets of the world. Whilst by every historic measure, markets are overpriced and too high, there are very strong stories for some sectors, in particular technology and healthcare.

With the exception of financial products where you invest on a regular basis and where you have a time horizon of over five years - we now advise every client of the Just Service Global Group (includes all advisory firms within our network) to complete the attached risk profile (see below and attached) and send it back to your adviser. We can then ensure that your current risk profile matches whatever financial products you hold. 

If you have completed or otherwise updated your risk profile in recent months and please ask your adviser to once again check your savings/investment/pension portfolios are consistent with your latest risk profile.

We ask you to forward the completed questionnaire to your adviser or to admin@justserviceglobal.com

This risk profile questionnaire serves as a discussion basis between you and your Financial Adviser on setting investment objective(s) and either, selecting investment product(s) appropriate for you, or reviewing your existing savings, investment or pension portfolios. It is considered as a reference when you make an investment decision. It is recommended that you fully understand the risks associated with individual investments before making any investment decisions. You should not purchase an investment product unless you understand it and it has been explained to you how it is suitable to you. The final decision is yours.