Between stocks and ETFs how to invest in 2021

What year will 2021 be for markets?

The year 2020 is drawing to a close. For the financial markets, it has been an incredible year. Skyrocketing volatility. Big drops in the first months of the year due to the pandemic and big rise from April May onward.
Clearly, not all stocks have moved in the same way. So do the indexes.
The NASDAQ with technology stocks (+40% since the beginning of the year) has benefited the most from this pandemic. On the other hand, the more traditional sectors, especially transportation (airplanes, ships, etc.) along with tourism were the hardest hit, not to mention oil-related companies.

At this point it is logical to wonder what 2021 will look like for financial markets, especially if you want to invest. What year, then, will 2021 be for markets? And what adjustments are needed, at the portfolio level, intersecting growth prospects, profit dynamics, and valuations?

Bloomberg estimated that 27 percent of the world’s good-quality bonds went negative. The 10-year Btp gives 0.5 percent. A year ago he was three times more generous. “In this context, there is no alternative: investment should be sought in the equity component.
It is true that between the stock market, which is in great recovery, and the real economy, which is in recession, there has been such a large gap that there is a hint of an imminent end to the rally, but one must also think that there has been an $8 trillion liquidity injection by central banks to stabilize markets that is impressive.

Of course, no one can know how the markets will perform next year. But we can see, however, that the rotation of portfolios from technology to other sectors has already begun (this is not to say that the Tech sector will go down, on the contrary. Maybe it will go up less than before): from Faang to old economy, industrials, commodities, transportation. There is also a strong investor interest in the green economy and clean energy to be noted. After many billions pledged for the green economy by various states, including Europe and Biden’s U.S. there is reason to believe that the sector will show great promise as early as 2021.

According to many analysts, 2021 will be divided into two stages. At some point the market (after the vaccine and the end of the Pandemic) will see the economy return to normal. Then a counter-rotation may begin: technology will again be favored, but stocks from the digital healthcare segment, the digitization of health services, biotech, and distance learning will be favored.

It will be a question of how long central banks will inject liquidity into markets, how long the dollar will depreciate. Central banks are continuing to buy debt. But how much debt can be created?

Among the more defensive sectors, experts say, could be those related to climate transition, to which about a third of the Next Generation Eu program, the 750 billion plan prepared by the EU to revive the economy, is allocated.

With a weak dollar and a positive economy as early as 2020, China and emerging markets could benefit and be positive players as early as 2021.

Green economy, China and emerging countries, Old economy. This the year 2021? We shall see. It will also depend on the efficacy of the vaccine and especially on how soon the epidemic will be cleared.

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