6 Investment Trends Worth Watching

The stock market was a bit of a rollercoaster ride in 2020. The market fell by a third in March 2020 before rebounding. It hit all-time highs by the end of the year. This was unexpected, and it shows that the market can do almost anything. However, you can take action today to profit from market trends that are far more predictable, if you're paying attention. Here are six investment trends worth watching.

Pharmaceutical Stocks Are Certain to Rise

The promise of a widespread or even mandatory COVID-19 vaccine will certainly benefit the pharmaceutical companies that manufacture it. Companies involved in the distribution of the vaccine will benefit, too. However, other trends will bolster pharmaceutical stocks in general. For example, an aging population uses more medical services and takes more medications than a younger one. And globally, the working-age population is declining as the population ages.

The Rebound Will Lift Depressed Sectors

While the coronavirus pandemic put many plans on hold, this doesn’t change the fact that people want to travel. The pent-up demand for travel will eventually cause airline, hotel, and cruise line stocks to rebound. People haven't given up the habit of eating out, either. This is why we can expect a surge in restaurant stocks as people return to their favorite diners. On the flip side, food delivery stocks can be expected to drop once people can go out to eat again.

People Are Investing for a Post-Dollar World

We’ve already mentioned the looming threat of inflation. This is driving people to invest in traditional alternatives like gold and commodities, as well as new alternatives like cryptocurrency. You could invest in commonly traded commodities like oil,or you could invest in commodities that are key to the high-tech economy, like cobalt.

Cobalt is used in many of our electrical devices, and nearly three-quarters of it comes from the Democratic Republic of Congo. That is why cobalt stocks in particular are poised to surge as the economy rebounds.

If you want to get in on the action, Wall St Now has a list of cobalt stocks for you to consider. Note that this list is not limited to American stocks. They run down each company’s business strategy and outline any other precious metals or materials that they produce as well. You could consider investing in cobalt stocks a way of investing in the digital revolution without buying stock in a Big Tech firm.

In contrast, the FAANG stocks have probably peaked. These high-tech companies may account for 20% of the value of the S&P 500, but they probably won't grow much more and are ripe for disruption. That is aside from the fact that they are being challenged by regional eCommerce and social media giants that are better suited to local tastes. Furthermore, the Big Tech companies may suffer if they're hit with antitrust litigation.

Cryptocurrency is primed for rapid growth because it is becoming both a medium of exchange and a form of stored value. Its widespread acceptance by young adults will mean it will be widely accepted by everyone in a few years.

A Housing Boom Is Almost Certain

With governments printing money in the hope of preventing deflation, they’re probably going to contribute to increased inflation. This is the likely explanation for surging home prices around the world.

Yet, there are reasons to believe that the housing boom will last. For starters, 98% of central banks have dropped interest rates to stimulate the economy. This has driven mortgage interest rates to record lows. Furthermore, the stock of existing single-family homes for sale is unusually low. Young adults and families crammed in close quarters want to buy homes, and the only solution is building more. Rising home prices will make real estate and associated stocks a wise investment.

Even if easy money dries up because central banks raise interest rates due to evidence of inflation, demand for housing will remain strong. On the other hand, work from home stocks will suffer as people can return to the office. Tech companies that enable working from home will probably remain stable, but they're not going to see rapid growth as they did in 2020.

Emerging Markets Are Ready for a Comeback

Emerging markets are ready for a comeback. As the world opens back up, consumer demand will expand. Since many emerging markets rely on commodity exports, they’ll benefit from the increased demand for the materials they produce. A few emerging countries like those in Eastern Europe and Southeast Asia that rely on exported goods will benefit, too. Furthermore, these nations have had to make market-friendly reforms and adopt technology to survive the pandemic.

For example, those with limited access to traditional banks had to adopt digital offerings instead. We can see this in the data. Digital revenue in emerging markets is growing at 11% a year, which is much faster than in developed nations. They're also seeing business costs fall faster than in other parts of the world.This puts them in a prime position to take off once things return to normal. That is aside from their overall growth trend. Top emerging markets account for around a third of global GDP and 12% of the global stock market. They have a long way to go before they reach parity with dominant players like the United States.

Digital Media Trends Will Continue

The government-mandated lockdowns only accelerated the trend of cutting cable and abandoning traditional TV. Studies show that traditional TV viewing fell 16% in 2020 alone, and that number may have been moderated by the fact that many people were watching the 2020 election closely. Digital entertainment is becoming commonplace, and it is now the default for young adults. This means you can invest in online entertainment companies. Just have a diversified portfolio instead of investing in a single hot stock.

The year 2020 showed us how an unexpected event can radically reshape societies and economies. However, these events also accelerated several existing trends, while other trends are certain to resume course. Know which trends are worth watching so you can take advantage of them.