The global financial market has weathered a tumultuous 2020 as it approaches one of the most critical phases of the year. Experts believe that the events of the closing weeks of the year would provide a clearer view of what to expect in 2021. Now more than ever, investors must take special care to understand market fundamentals, analyze trends, and make informed moves accordingly. While these requirements are what you will ordinarily expect of every investor, several factors are making it extremely difficult to implement them correctly.
One of such is the level of uncertainty surrounding the investment landscape amid the unrelenting coronavirus pandemic. Truth be told, investors are on unfamiliar grounds. Hence, the best bet is to identify potent patterns painstakingly and run with them. Individuals and asset managers that have managed to achieve this conspicuous but seemingly difficult task have enjoyed successful stints in their preferred market. One of the most compelling trends in the last few months is the propensity of the tech stocks and indexes, especially FAANG, to outperform other stocks. For example, Apple (AAPL) has generated over 50% year-to-date returns to investors.
Even though this trend seems to have been the status quo for the better part of the year, indicators show that the next couple of months may take a different turn. Experts argue that the progress made so far as regards the creation of an effective coronavirus vaccine could spur the value sector. In other words, what this means is that growth stocks that have somewhat become the centerpiece of the global markets could take the back seat sooner rather than later. Another argument making rounds is that momentum investing will emerge as the dominant market trend in the next couple of weeks. Whichever it is, there is a strong possibility that investors must adapt to emerging trends quickly or get left behind.
In light of these varying projections and endless possibilities, I reached out to the Aristo Investments team, a quantum trust fund highly experienced in trading and investing in global financial markets. The fund focuses on generating exceptional returns to clients through advanced quantitative investment strategies entrenched in precise mathematical and statistical analysis. Below are excerpts from the interview, where he shared insights on the current and future state of the investment landscape.
Andrey Sergeenkov: What is your thought on the performance of the global financial market in 2020?
Aristo Investments: A majority look at the market and instantly focus on the headliner, which is the S&P 500, to capture the performance of the global investment terrain in 2020, whereas this sector is buoyed by the success of tech stocks and does not reflect the entirety of the global financial market. I believe that aside from the returns generated by mega-cap stocks, the investment landscape has struggled generally as a result of the pandemic. However, I am impressed by the resolve of investors in these trying times to continue to engage actively with global markets irrespective of economic uncertainties. The show of tenacity on the part of investors has, to an extent, proven that better times lie ahead.
Andrey Sergeenkov: Now that we are at the fringes of 2021, what are the market trends you expect to emerge?
Aristo Investments: The closing weeks of every year bring increased market activity and the potential to either consolidate on year-to-date profits or recover from losses. In most cases, investors tend to adopt momentum investing to offset losses by capitalizing on tested and trusted investment opportunities or assets. If this is to be the case, then expect high performing assets to continue their momentum. However, do not forget that we are currently in unchartered territory, and there is a lot that can shift market dynamics in split seconds.
Andrey Sergeenkov: What are the stocks that may likely benefit from this trend?
Aristo Investments: If all goes to plan, expect mega-cap stocks to continue their uptrend. This includes Apple, Microsoft, Facebook, Amazon, Qualcomm Inc, and so on. The same applies to stocks that have maintained positive yields all through 2020, like FedEx Corp and Tesla.
Andrey Sergeenkov: As you said, there are a lot of factors that can change the tides, considering the present state of the investment terrain and the global economy as a whole. Do you mind sharing one of these factors?
Aristo Investments: Of course. As of now, the most compelling factor revolves around coronavirus. It is common knowledge that a number of pharmaceutical companies and research facilities are making significant progress in the quest for COVID-19 vaccines. The sheer possibility of this will spark the demand for value stocks. Hence, expect investors to increasingly invest in the airline, tourist, energy, and manufacturing sectors in anticipation of a return to normal economic activities in a majority of regions.
Andrey Sergeenkov: How can investors negate risks, considering the high level of uncertainty plaguing the global economy?
Aristo Investments: Like we always tell our clients, the best way to mitigate risks is to adopt a wide variety of strategies and complement them by allocating funds to uncorrelated assets. If you are relying on a long-term investment strategy, it is advantageous to dedicate a portion of your portfolio to short-term profits as well. In all you do, ensure that you establish a risk diversification strategy and invest in liquid financial instruments only.
Andrey Sergeenkov: Speaking of portfolio diversification, what is your take on Bitcoin’s growing acceptance in the investment world?
Aristo Investments: Bitcoin is one of the top-performing assets in 2020 and the last decade. Hence, it comes as no surprise that investors have begun to incorporate it into their portfolios. The growth metrics of the bitcoin market shows that the digital asset has outperformed Gold as a hedge against inflation. If this continues, expect more high net worth individuals and big corporations to acquire bitcoin as a reserve asset. I believe that this mainstream adoption will spur the price to surpass its record price peak.
Andrey Sergeenkov: Apart from Bitcoin, another exciting investment hub in the crypto market is DeFi. As an investment expert, how do you rate this nascent but explosive landscape?
Aristo Investments: The concept of establishing decentralization as the core fundamental of financial instruments and services is a unique approach that seems to resonate with investors. Combine this with high yield generating mechanisms, and you have a fast-growing sector with loads of opportunities. Without any doubt, this methodology is slowly becoming the soul of the crypto industry. However, compared to the likes of Bitcoin, this innovation is relatively new. Therefore, it is not as stable and comes with additional risks.
Andrey Sergeenkov: Tell us more about Aristo Finance Fund?
Aristo Investments: We are a team of individuals with over 16 years of experience in the asset management market. We specialize in applying quantitative analysis methods to generate high returns for our global network clients. To this end, we have developed in-house advanced software to carry out mathematics and statistics-based analysis for accurate market projections and decision-making processes. More importantly, we ensure that all our operations fall within the confines of the law.
Andrey Sergeenkov: How does your Aristo compare to other investment funds?
Aristo Investments: One of our defining attributes is that we provide personalized services based on the preferences of each client. Hence, there is a lot of communication going on to understand what each client needs and identify the assets suitable for specific goals. Likewise, we utilize the quantum method of trading, which promises higher yields. However, despite our quest for impressive returns, we ensure that we adhere to standard risk management strategies like portfolio diversification and other risk diversification practices.
Andrey Sergeenkov: What are your projections for 2021?
Aristo Investments: While nothing is etched in stone, I expect the global financial market to recover as a whole as soon as industries affected by the pandemic resume normal operations. This possibility presents lots of yield-generating opportunities for investors.