What a week of contrast from the previous 7 days! From an impending “Winter is Coming” scenario to a “We now see light at the end of the tunnel”, a 180 degrees turnaround. From pessimism to optimism in a flash.
The virus vaccine is targeted to be rolled out by America in the next 2 weeks. The first group of people to get it will be the front line workers and the elderly. Billions of doses are in the pipeline and there are 60+ vaccine candidates getting ready.
Would everyone take it? The “Yes!” group – sure, why not? The “No” group: fear of the unknown, probably watched too many zombie movies (“I am Legend”). The anti-vaccination people too, with their stance against all vaccines. Herd immunity via the vaccines will not happen if the majority do not take it and the virus will continue to travel around the world for years. Look at the smallpox vaccine. It took years to eradicate.
Would you take it if it means a return to the world before 2020, to travel again and to reduce the possibility of dying? Or do you want to extend the annus horribilis year of 2020 into 2021? If you are a front line worker confronting the virus every day, wouldn’t you want to immune yourself to it now?
There are still a lot of unanswered questions as we head into a critical leg of this virus journey as winter approaches. We can see multiple waves happening over the last 6 months even as we thought that it was under control. It then returns with a vengeance. Just a tiny crack in the defences and it will exploit the gap to infect again. Thanksgiving this week resulted in mass travel not seen since March in the US. This could mean a new wave of cases in the next 2 weeks again.
The approaching Christmas and year-end holidays in a month’s time could be another opportunity for COVID19. Cases could jump again into Jan 2021 as winter begins in the Western hemisphere. While the launch of vaccines will start in mid-Dec, the ramp-up may not be in time to stop the new surge in cases by early next year. More lives may be unnecessarily lost by then as Humanity race against the clock to contain it.
As a forward leading indicator, the equities market have been roaring to new highs this week. The onslaught of good news from the new vaccines has excited investors. Cyclical and old economy shares that had been crushed by COVID19 staged a strong come back as fund managers rushed to rebalance their portfolio after having gone full-on into tech stocks. Biden’s win has increased the probability of more stimulus aid and economic relief to the citizens. We will see more liquidity chasing after assets in 2021.
The world is also going to be more focused on climate change and renewable energy now. A flurry of IPOs that was delayed this year will begin to push for rollout very soon. Interest rates will remain low everywhere. This will be conducive for higher stock market prices. More retail herd mentality trading will drive certain stocks to higher highs as the ease of trading, zero commissions and lockdowns encourage new converts.
What should an investor do now? I feel that the virus has accelerated the adoption of technology across all industries. What normally took a few years to pick up was cramped into months. Cashless payments, eWallets and QR codes are now mainstream overnight. The launching of 5G will make real-time cloud computing a reality and hence autonomous self-drive cars become viable.
I had missed the whole Tesla bull run, thinking that Elon was getting crazy last year. I have just completed reading the book about him recently. I now know the background on how Tesla and SpaceX were created and that Solar City was bought by Tesla for $2.6 billion in 2017. If I had read this book a few years earlier, I would have bought and held on to Tesla for the long run, like what I did for Apple shares. EV companies are the rage now, with China stocks like Nio rising 10x.
Seeking to discover the next big thing, I believe that the time is ripe for a new technology in batteries to bring us to the next stage. Lithium batteries are so old school. There must be a better way to store energy out there. Hydrogen cells look promising and I am getting interested in firms like FuelCell, PLUG and Bloom Energy which may be the next big thing.
Meanwhile, China is recovering much faster than the rest of the world as it looks inwards for domestic growth. Certain Chinese stocks that go deeper into technology like KE Holdings should do well. The time for cryptocurrencies may be ahead as they become a part of the solution to enable frictionless and instantaneous bank payments. Bitcoin is the only successful Blockchain product to date. This will change as central banks like China creates private ledgers to track CNY.
2021 looks to be very exciting with a boom in tech and pent up demand after COVID19 as central banks continue to flood the markets with liquidity. There is a lot of possibilities and trends to benefit from. The general themes are emerging and we should make all efforts to capture them for an interesting ride ahead.
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