Sunday 10 January 2021

Will the stock market crash in 2021?

I am back with another video (very click-bait kinda title haha), do hit the like button and subscribe to my channel fro more content. As 2020 ends and 2021 comes along, many people are thinking if the stock market growth will continue on into the new year? Will there be a crash? Otherwise will there be any changes to where investors will be putting their money in?

There are many things that cannot be predicted in the stock market, things can go either way and you might get surprises along the way but what we can do is to analyze based on data and the whole environment around us to make some deductions about how the stock market will be like.

Definitely, on everyone's mind:

Will the stock market crash in 2021?

What do you think? Many have said that the current stock market has had a huge bull run and for it to continue going up like it did after the pandemic strike in 2020 is a little impossible. For me, I would think that in 2021 the stock market would depend on whether the world (mostly US and UK) if they would have brought the pandemic under control and also if the overall economic situation improves. For example, travel and also service industries, of course in 2020 we fully experience that the economy is not the stock market and that the stock market does not reflect what is happening in the economy.

It is impossible for someone to predict how the market would pan out in 2021 and I wouldn't want to be saying something that I am not even sure of. What I can say is to continue to stay invested, have a sum build up for when the prices drop and you will be able to buy in. Also, to create some form of DCA to ensure that even if the market goes up, you are still putting money in monthly. I haven't really experienced a market crash since I only started investing in 2017, the craziest drop was in Mar 2020 and other times were slight drops that wouldn't qualify as a market crash. I have seen many documentaries on the 2007-2008 financial crisis which wiped out many people's life savings as well as making many jobs redundant. Let's hope I will not experience that because I feel that I am in a position where my job can easily be made redundant as it is a rather entry-level position. Getting a little out of point now.

If there isn't a crash, will tech stocks continue to rise? Or will there be a shift?

The Stock Market Is About To Flip

Tech stocks have dominated 2020 from Apple to Microsoft, Netflix and Zoom just to name a few, 2020 has been the year of digitalization and when technology rise up and dominated not just our personal but work life.

On my side, I could see my company automating more of it's processes and going digital as more IPA (intelligent process automation) is being put in place and even RPA (robotic process automation) is coming up. With all these advances at work, technology is really so essential and makes me doubt if I will be even needed in my work place in the near future. Will this trend continue on in 2021? Or will a shift happen. The video by Graham Stephan talks about how money is slowly shifting out of tech stocks (growth stocks) and into value stocks that are recovering from the effects of the pandemic. This is because tech stocks might be over-valued and people will be looking for stocks in recovery that are under-valued. For example, there was a huge boost in transport, financials and energy stocks after a vaccine was found.

From that, I would believe that there is a certain amount of truth in that, in my opinion, people are finding technology stocks to be over-valued and if they can still perform in 2021, I believe stock holders would be pleased but ultimately, everyone is looking for something under-valued that could be the next Tesla or Amazon and giving you a 100X multi bagger.

Because of the pandemic, many industries that was hit hard are set for recovery especially so when a vaccine has been announced but it is definitely not in the safe zone yet as US and UK are still struggling with their cases and many parts of Asia as well. With a new strain of the virus being discovered, 2021 will really test how the government react to the situation. If they are able to control and implement some kind of effective system, that will be great. Otherwise a repeat of 2020 might just happen. Definitely, I still see tech stocks as being crucial as we will still rely high on technology but with it's current pricing, I might stand on the sidelines first and observe. Another interesting area to look at is genomics, Cathie Wood of Ark Invest mentioned that genomics will be the next FAANG and Chicken Genius has also second this noting that he has been talking about ARKG (ARK Genomic Revolution ETF) a while back although it will not be a next Tesla. Of course,there are also other areas with growth opportunity like cryptocurrencies eg how Bitcoin which is now already $29,000. No one can predict the future. Excited to see how the stock market turns out in 2021.

Judging by the recent few days rally, we can see that the stock market is irrational, I have not seen such a crazy rally especially with the Tesla and LMND stocks that I am holding. But I will try hard and still hold on and stay invested. Hope you guys enjoy my videos so far, do give a like and subscribe to my channel, it will really help me out! Stay tuned for my videos as I talk more about my investments and personal finance.

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