As 2021 approaches, investors are looking for where to invest their money as the markets continue to climb. With both value and momentum factors in play, three key sectors have been identified as potential opportunities for investors: technology, energy, and retail.
Technology stocks, particularly those in the semiconductor, cloud computing, and 5G sectors, are expected to benefit from continued economic stimulus, improved consumer spending, and the overall digital transformation of the global economy. Additionally, as restrictions on work-from-home (WFH) and remote learning become more relaxed, attention will shift toward products and services related to these activities, offering further opportunities for tech investors.
The energy sector, largely due to President-elect Joe Biden’s plan to use the investments to transition to clean energy, is also likely to be a winner in 2021. Increasing focus on renewable energy sources will be helped by the fact that President-elect Biden’s plan also includes an additional $400 billion in government spending for clean energy projects that are expected to boost the industry.
Finally, the retail sector may also benefit in 2021. Consumer spending is expected to remain relatively strong in 2021, as increased consumer spending and improved economic conditions will lead to creeping inflation. This should be good news for retailers who are looking to invest in products and services that can be sold to capitalize on short-term market trends.
These sectors, when taken together, provide investors with the opportunity to capitalize on both momentum and value factors in their portfolio. As such, investors should remain watchful of their portfolio exposure to these key sectors to ensure they maximize potential gains while reducing overall market risks. Lastly, investors should also remember that the markets continue to be vulnerable to unexpected economic and political developments, which could have a significant short-term impact on stock prices.