• Allen Minassian

The Year After | Looking Beyond 2020

2020, with its deadly pandemic, global recession, stunning market collapse and surprisingly rapid recovery, reinforced the notion that it is impossible to know exactly what lies around the bend. Time will tell when we will all feel comfortable heading out to dinner and a movie with friends again or boarding a plane and taking a vacation. Investors can be sure there will be more twists and turns in the markets this year. Below are a few themes to consider as we embark on “the year after”.


Tapping into the digital future

The global pandemic helped accelerate digital life which in turn is reshaping the US economy, changing consumer habits and expectations, and altering the competitive landscape for entire industries. Sure, people were shopping and accessing health care services online before COVID, but the pandemic has amplified demand and created new opportunities for investors and digitally savvy companies. This broad-based investment theme crosses many key sectors, from retail and entertainment to advertising and payment processing. The key question is which of these trends are long lasting and which will fade along with the virus. According to American Funds portfolio manager Mark Casey, “People formed new habits in 2020, and those habits are going to be sticky.”  All that said, to be clear, digital acumen does not automatically translate into success for companies.

Go Global

The U.S. has long been considered the global leader in innovation, with its cutting-edge companies, robust venture capital system and high-tech infrastructure. But to think of innovation as an exclusively U.S. story would be a mistake.  These days, Asia and Europe lead the world in some of tomorrow’s technology, including renewable energy as well as digital payments. This serves as one more reminder why investment opportunities in international and emerging markets should not be ignored. Although the U.S. is likely to remain a primary engine for innovation, it would be shortsighted to think of it as the sole province of inventive companies.

Maintain balance in your portfolio

Returns for consumer tech and digital companies have dwarfed those of most other industries over the last decade — a trend that was amplified in 2020 as consumers adapted their behaviors amid the COVID pandemic. So, it is probably no surprise that these growth-oriented companies account for an increasingly larger share of portfolios which in turn has significantly reduced allocations to value oriented investments. The message here is not to avoid growth stocks going forward, but rather to ensure that they have not outgrown their intended position and role in the portfolio. Now would be an ideal time to review portfolio holdings to ensure they are aligned with your long-term goals.