Take the bull by the horns

Where to invest in 2021

We all know investing is tricky and timing is everything, to buy the dips and all the cliches about the stock market. But for sheer roller-coaster extremes, it’ll be hard to beat 2020. The Dow Jones Industrial Average dropped below 19,000 on March 23 before topping 30,000 for the first time in November. On that same March day, the S&P 500 closed at 2,237.40, and it hit 3,700 in December.

When we couldn’t do much face-to-face interaction, tech stocks soared as we all got used to Zoom meetings followed by virtual happy hours to complain about those meetings. In 2021, we have a new presidential administration coming in, COVID-19 vaccines rolling out, and a hope that maybe, just maybe, life will return to some semblance of “normal” (though we’re not entirely sure what that means at this point). With all that in mind, what should you invest in in 2021?

Cannabis

With five more states passing measures in 2020, recreational use is now legal or soon to be legal in 15 states plus Washington, DC. Another 22 have approved medical uses for cannabis. Though the measure is unlikely to pass in the Senate this time around, the House of Representatives voted to federally decriminalize cannabis use. It truly is only a matter of time before federal bans are gone, and in the meantime, there’s plenty of growth in the industry as it is, especially given the large markets in places with dispensaries or adding them this year.

Travel

With international borders closed or open to only a handful of countries in travel bubbles over the course of the pandemic, the industry took a severe hit. Which means stock prices are low right now. But people haven’t lost the desire to travel, so there is a huge amount of pent-up demand. As vaccines become widespread and more borders open, airline, cruise line, and hotel stocks are sure to shoot up as revenue returns and future bookings increase. Stock price is largely a function of future outlook, so even bookings a year or two out will provide a boost.

Restaurant chains

Sadly, local restaurants are extremely hard-hit and many won’t be able to hold out until people are willing and able to do indoor, sit-down dining across the country. While they’ve had to close a lot of locations and some filed for bankruptcy, large corporate chains are better positioned to weather the storm and expand throughout the year as demand returns. People really want to go out again, and judging by social media posts about longing for experiences they used to be sick of, they will probably flock to whatever is open.

Energy

With people going out into the world again, that means a lot more buildings back in use, a lot more transportation usage, etc. That means a lot more power and fuel use. In the short term, that means more fossil fuels and natural gas. Though it remains to be seen how much will pass Congress, the Biden administration is determined to make clean energy a key part of the economic recovery. Even with Senate resistance, renewable energy is growing steadily and becoming cheaper than some alternatives. It will undoubtedly be looked at more favorably by the government than it was when the president suggested windmills may cause cancer.

Asian markets

Despite, or perhaps because of, being the epicenter of the pandemic, China has recorded less than 5,000 COVID-19-related deaths and has been in full swing economically for some time. Those numbers are likely inaccurate, and the way they achieved control of the virus is not palatable to most democracies, but the fact remains. Other Asian countries such as Vietnam have seen supply chains relocated from China, and countries that navigated SARS and other respiratory diseases were better prepared for COVID. They’re way ahead of other parts of the world in terms of recovery. Farther out in other parts of the Pacific region, Australia and New Zealand have the pandemic fairly well handled and are beginning to recover.

What you think is right

What you invest in is increasingly not just a way to make money but a way to support what you want to see in the world. Maybe you don’t want to see large corporations get larger at the expense of the little guy. Maybe you don’t want to encourage use of fossil fuels. Maybe you have qualms about how the workers are treated in those Asian markets. Maybe you have problems with cannabis. Pegasus Capital Advisors and Partners Group have pioneered impact investing, which evaluates companies based on corporate social responsibility. BlackRock, the world’s largest asset management firm, is focusing on investments that combat the climate crisis. With the level of customization available in portfolios now, odds are you can devise a plan you feel good about and that offers a return on your investment.