2020 is coming to a close, and there is one word that I would sum it up with: tumultuous.
2020 Review
2020 will be taken as a lost year of sorts, depending on whose perspective. However, from this doom and gloom emerged the scale and speed of adaptability and pivoting which we had not seen before. Thoughts had become ideas, and ideas manifested into practical applications. The COVID-19 pandemic inadvertently created a huge social experiment on a global scale, and humans were either welcomed or forced to change their habits and styles, which is now deemed as the “new normal” (one of the most overused phrases of the year).
The financial markets had seen its fair share of a roller coaster journey throughout this pandemic year. The STI (as at 31 Dec 2020) year-to-date (YTD) was at -11.76%, recovering from a -30.22% YTD on 23 Mar 2020, its lowest point. The S&P500’s YTD was even more impressive: +15.52% (as at 30 Dec 2020), despite a fall to a low of YTD -30.75% (also on 23 Mar 2020). The disparity between the two could be attributed to one main factor; the S&P500 contained a number of technology counters, in which the sector and industry (and anything related to it) experienced a super huge boost in their relevance and importance in paving the way of the new normal.
Speaking of which, here are the three counters which are representative of my “next big thing” (i.e., cybersecurity, electronic payments and alternative energy respectively), and see how they performed in 2020:
HACK: +41.31%1
IPAY: +33.49%1
ICLN: +142.08%1
To me, they are still relevant in 2021, and the years to come.
2021 Preview
As usual, I would like to give a disclaimer that I really do not know what the future holds, with the very big real-life COVID-19 example which almost all of us did not see it coming, and not expecting it would still be current, unlike SARS that faded off within a year.
2021 would still be dominated by the COVID-19 narrative, and with it affected sectors and industries such as overseas air travel and tourism will remain as it is. However, true to the resiliency and innovation of humans, activities such as domestic tourism are keeping a semblance of activity to keep the economic machine going. The pent-up demand is there, not just for the tourism business but others, too, and as long as the supply is available, it would be life as per normal (or new normal), even with COVID-19 is around.
Technology would be “invading” (instead of creeping) into our lives, as we are looking at more ways and methods to get our things done without physically mingling with others (read: social distancing). However, humans are social creatures, so some semblance of face-to-face meeting is here to stay, so do not write off places like malls and offices totally.
The next “market down” due to the pandemic, if it happens in 2021, may not be as drastic as the 30-ish percent fall back in end March 2020, partially credited to the vaccines which are being rolled out and the general populace starting to get inoculated, and COVID-19 does not come as a surprise anymore. However, while not trying to be a fortune teller, there might be a fall due to the downstream repercussions of the COVID-19 reaction, which may happen this year, next year or even not at all. Having a balanced portfolio is still key in reacting to the economic situations around us.
Bob
As at 31 Dec 2020, Bob’s Bedokian Portfolio had grown to slightly about SGD 67,000 (excluding the cash component which is not shown) and gained a dividend amount of SGD 1,741.67. All asset classes (except cash) had shown healthy growth for 2020. Bob will rebalance on 4 Jan 2021 with another SGD 5,000 injection, so stay tuned to his portfolio.
Happy 2021!
Disclosure
The Bedokian is vested in ICLN and IPAY.
1 – ETFDB.com, YTD as at 30 Dec 2020 (accessed 31 Dec 2020)
