Investment Theme
Trying to put aside every that's happened in 2020 with the COVID pandemic, it was a year of several broad pivots in the financial markets. We've already seen multiple leadership changes just this year from growth to defensives, back to growth and then finally to cyclicals.
With investors firmly in the camp that the COVID vaccine, with support from the government and the Fed, will lead to a global economic recovery, it's easy to make the argument that cyclical leadership could continue in 2021 (and I'm in that camp as well).
I'm also foreseeing another year which could see investors making broad pivots in their collective portfolios outside of just the 30,000 foot view of defensive vs. cyclicals. These are my top 5 theme changes I expect to see in 2021.
Overview
By almost any measure, 2020 was a wild year. We've seen the coronavirus rock the financial markets and our very way of life with no firm end to the pandemic clearly in sight. We do know, however, that COVID shifted investor sentiment multiple times this year.
Investors entered the year fairly bullish but cautious about the prospects that weakness in European financials and negative interest rates globally could pull the global economy into recession. By the second quarter, we were undoubtedly there and investors pivoted out of risk assets and into more defensive areas, including Treasuries, consumer staples and gold. Once the Fed stepped in with its multi-trillion dollar stimulus packages, growth was back out in front led by the mega-cap tech names. As news of the success of Pfizer's (PFE) COVID vaccine hit the street, sentiment shifted over to the areas of the market that usually do well coming out of an economic bottom, namely, cyclicals and value stocks.
I believe 2021 could be another
