Dear readers, whenever it comes to December, the last trading month of the year, there will be a flurry of investment analyst reports looking at the proverbial crystal ball and give their predictions on what are the stocks to buy for 2021 for the coming year or next year. To me, I could only say that their predictions are just a guide and definitely not always correct.
So moving forward to 2021, what are the stocks to buy for 2021? Analysts will still give their take on this and in this post I will share with you mine.
To begin with, the trading year 2021 ahead will be challenging given the current Covid-19 situation which shows no sign of letting down especially in America and Europe. Hence, I believe this Covid-19 theme will continue to drive the stocks markets forward for 2021. Set against this backdrop, there are some three themes investors can look at, which I have classified as (a) momentum stocks (b) recovery stocks and (c) financial meltdown.
First, momentum stocks. Momentum stocks are nothing more than the healthcare and personal protection equipment related stocks which have done exceptionally well. Think Medtecs International stock on the local front. There have been articles that say facial masks, hand sanitisers would likely continue to be widely used in this post Covid-19 world. And even if the Covid-19 situation may peter out, it was thought that these items will continue to be widely used as a form of precautionary measures.
Second, recovery stocks. The Covid-19 situation has affected many sectors of the economy in the world and if the war against Covid-19 is to be finally won in 2021 with say the positive development of the vaccine, the recovery play may be an option for investors. Think Airlines, Travel, etc. What has come down significantly this year could emerge winners in 2021 with the victory against Covid-19
Third, financial meltdown. The global economy was already not in a good shape when Covid-19 hit the world. And despite the uncertainties in the markets, stocks markets have still managed to generally head north in 2020. Despite the aforementioned, I think many investors are too concentrated on the impact of Covid-19 on the stocks markets that they may not thought that there are other factors at play. Like what I have always shared with readers here, there has not been a financial correction for more than a decade (not that I want as it is not good for all) but what goes up must one day go down and this applies to the stocks markets as well.
With the above, I have presented readers of the three themes that investors can look at for 2021 and I must say each is possible. It is therefore not easy to predict what 2021 will hold for investors. I would recommend just one stock that will be resilient against any of the three scenarios.
The pre-requisite to this recommended stock investing strategy is really not to invest in any company counter at all to reduce all corporate-related risks since we really do not know which companies will stay afloat in 2021 against the current economic backdrop.
This recommended stock strategy is none other than to invest in the Singapore Straits Times Index (STI) through the STI ETF (ES3.SI). That way, you need not worry at all about the investment capital you invest in any company counter will go to zero since it is the index that you are investing.
I recommend the STI ETF (ES3.SI) and recommend not to look further when it comes to index-based ETFs investing since investing in an overseas index ETF brings about the risks of Forex. Just take a look at the USD/SGD rate in the recent sessions.
Investors should consider the STI ETF (ES3.SI), it will be your good friend against this post Covid-19 global economy as you just need to focus on how the overall Singapore stocks are doing, considering to invest when the STI goes low and there is scope to hold it in the long term even if the short-term markets are choppy. That’s said the STI ETF(ES3.SI) is now on the high side and investors should consider an opportune time to invest in it.