2020 has been a crazy year of unpredictable events and high tension. The ongoing COVID-19 pandemic, civic unrest and presidential election have all been sources of uncertainty in our personal lives, as well as the business world. As we head into a new year, many of us are wondering what to expect from the financial market in 2021. Will the rally continue? What industries will do well in this "new," post-COVID world? Is this a reflection of the economy that most of us live in? How do you navigate this?
On our latest episode of the GoGedders Podcast, we were lucky enough to sit down with Brian Andrew, a local finance expert. Brian is the President of Johnson Wealth and Chief Investment Officer for Johnson Financial Group with over 26 years of experience in the financial services industry. In the episode, we go over the trends the stock market has been experiencing – including the COVID dip and recovery – and how current events may affect the market, as well as areas of the market to keep an eye on.
For many months now, COVID-19 and the new habits we have developed from the pandemic have been a huge influence on the stock market with many industries suffering and big tech carrying the S&P 500. “I liken this to the way you think about working or dieting ... if you can make it past 12 weeks in a new routine, it is probably going to stick. As a result of that, the benefit that those "stay-at-home companies" – the Netflixes and Amazons, as an example – those behaviors we had are different now and they won’t go back to the way they were before,” Brian explained on the podcast.
The presidential election was another source of uncertainty this past year. The 2020 election was by far the most tumultuous election in our nation’s history. The parties have never been so divided, so it is not super surprising that our political rollercoaster of a year has caused some dips and barrel-rolls in the stock market. Back in September, we saw this volatility; there was a huge sell off since there was so much uncertainty about the election results. With the presidential results in, the market has been seeing a bounce back. "Markets like certainty," Brian said, "and so we started to see a recovery in the market."
Some areas of the market are recovering faster than others. Cryptocurrencies – which create a better, safer environment for financial transactions – have been seeing a surge lately, surpassing values that haven’t been seen since 2018. "Now (in 2021), I think people are understanding the technology better, the use of it and the application, so they are buying it as a result,” Brian said on the podcast.
Another huge benefit to cryptocurrencies, like Bitcoin, is that they are a store of value. Like gold, cryptocurrencies are finite. Like how gold is mined from the Earth with a pickaxe, cryptocurrencies are mined in a digital landscape with a powerful computer. Cryptocurrencies will be something to continue watching, as it may play a big role in how the world handles financial transactions in the future.
“Keep the noise out and focus on the fundamentals of the things you are investing in," Brian told us as we were wrapping up the episode. "I think that is the best advice I can give."
You can listen to the full episode on our website at www.ggmm.io/the-gogedders-podcast/, or listen to us wherever you listen to your podcasts.