To many, 2020 will be remembered as “a year to forget”.
As we segue into 2021, the vaccine rollout brings promise for recovery this new year, and fresh hope that life will be back to normal soon.
The stock market went on a roller coaster ride in 2020, with big winners and losers.
Gradual but sustained recovery
This year should see a gradual recovery for all sectors that had been badly impacted by the coronavirus last year.
As countries continue to grapple with the spread, there will come a time when more people get vaccinated, and the tide will slowly turn against the disease.
This will allow economies to slowly open up again. Industries such as air travel and tourism should witness a sharp recovery once the all-clear is given.
Other affected industries such as transportation and retail should also see an improvement in demand as some semblance of normalcy returns.
And as businesses recover, profits and cash flow will improve too.
The trickle-down effect will allow people to feel more confident about spending, thereby lifting demand for goods and services.
A world of opportunities
There are many opportunities out there for the smart investor to take advantage of.
The recovery will most likely be uneven, with some sectors benefiting or recovering better than others.
Such instances provide ample opportunities for investors to sift out the quality companies within each industry, and to slowly deploy capital to them in anticipation of the eventual recovery.
And for industries that saw phenomenal growth last year, such as cloud services, online payments and healthcare gloves, it’s also not too late to invest in them as structural changes in the way we work and interact have generated long-term tailwinds for these sectors.
Don’t let fear hold you back
As the saying goes: there is always something to worry about.
News outlets have reported new strains of COVID-19 that are supposedly more contagious.
There are also worries that the logistics of distributing the vaccines could overwhelm some countries that are ill-equipped to manage the complexities of storage and distribution.
However, the power of human ingenuity should prevail, and allow us to eventually fight back against this invisible enemy.
The advice here is to not let fear hold you back from investing in what is essentially a strong recovery theme.
It’s natural for obstacles and stumbling blocks to surface, but they should not derail the overall progress that we have made in our fight against the pandemic.
Get Smart: It’s time to invest
With an abundance of opportunities out there, it’s time to put your capital to work and find great companies to invest in.
We are certainly going to do that.
We want to have the option to jump in when the opportunity presents itself.
When stocks are cheap, we’ll buy more. When stocks are expensive, we’ll buy less.
But the idea is that we want to be there to take advantage of the recovery.
Whether it’s Singapore, Hong Kong or US companies, the strong stocks will offer us a great chance to grow our capital and also augment our dividends inflow.
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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.