GameStop mania might be over, but retail investors are here to stay.
A new, younger, and social-media-savvy demographic is entering the share markets at unprecedented levels, using publicly available information and communities to refine investing decisions. In fact, Goldman Sachs found that retail investors beat Wall Street pros during the market comeback last March, with the amateurs’ top picks outperforming those of hedge funds.
The everyday investor footprint will continue to grow with the rollout of coronavirus vaccines, and a continuation of governments putting stimulus dollars to work along with historically low interest rates. Here are several global trends retail investors are following closely in 2021.
Consumers continue to flock to e-commerce marketplaces, and it’ll be hard to convince them to go back exclusively to brick-and-mortar stores once everything gets back to "normal”. Etsy, a US-based platform for handmade gifts, expects continued growth in 2021, alongside behemoth online retailers like Amazon, which happens to control almost half of the US e-commerce market, proving why it’s considered one of the world's best businesses.
MercadoLibre is referred to as Latin America's Amazon and its shares have been on fire, more than doubling over the last year. While the rest of the world is still in the early stages of e-commerce, two of MercadoLibre's largest consumer markets - Brazil and Mexico - have internet penetration rates of around 65%. E-commerce investors will be watching to see if it can fulfil its long-term Latin American growth ambitions.
In case you haven't been paying attention, North American marijuana stocks have been blazing hot this past year. Unlike other industries, cannabis stocks experienced weed-like growth during the pandemic and have been on a high since US President Biden’s election, which came with the possibility of softening US cannabis laws. Cannabis legalisation is sweeping North America, with 15 US states legalising recreational marijuana over the last few years and full legalisation in Canada back in October 2018.
While the cannabis sector seems plagued with cash flow issues, some argue that these are short-term growing pains and will be solved as the industry matures. Back in 2016, legal cannabis sales in North America surpassed US$6 billion, and by 2026, it’s expected to be a US$50 billion industry.
The US has officially re-joined the Paris climate accord, and it's expected that the Biden administration will push forward a US$2 trillion spending package to invest sustainably, encouraging more renewable energy projects.
Investors are increasingly turning to sustainable investing and looking to ESG (environmental, social, governance) investments to avoid polluters such as big oil, and to benefit from industry innovators. Almost US$19 billion flowed into ESG exchange traded funds (ETFs) in the US last year, indicating that investors used their investments to reflect certain values.
Sustainable investing already accounts for a third of all assets under management in the US. A recent BlackRock survey found that investors plan to double their allocations to sustainable funds over the next five years and look to wind and solar power, electric vehicles, batteries, and new fuels.
The pandemic continues to boost the home improvement market, with chains like Walmart, Home Depot, and Lowes considered essential services. Pinterest is helping to inspire DIY enthusiasts and continues to see its loyal fan base grow, leading to rising profits.
We’ll see continued growth in online exercise and entertainment markets. Remember, it’s been a year of indoor, at-home exercise for many, so it’s going to take a while for gym enthusiasts to emerge from their cocoons. Many of them won’t go back, as they’ve adopted on-demand workouts by companies like Peloton. Netflix and Disney are expected to continue to double down on their digital media empires as they emerge from the pandemic.
The pandemic has changed the way we work, probably forever. We now know how important it is to have the flexibility of an online presence, how vital data-sharing is, and how productive remote work can be. Thanks to the (im)perfect storm of 2020, the cloud technology market is expected to get stronger, and many believe it will become a trillion-dollar industry in the coming years.
In addition to its industry-shaping e-commerce platform, Amazon leads the cloud computing market but has a few nipping at its heels. Well-known for its Windows and Office software, Microsoft has successfully reinvented itself into a cloud powerhouse and is second to Amazon in cloud-services market share. But in 2021, eyes are also on Alphabet's Google Cloud, growing at a much faster pace than Amazon Web Services.
Relative newcomers are also making their mark, such as Twilio, a cloud-based provider that helps mobile app businesses engage with their customers. You might not know it, but you’re using Twilio when you message your Airbnb host, so the opportunity for other successful applications could make 2021 another good year for Twilio.
This article is of a general nature and is not financial advice. This article is not a recommendation to invest in any of the companies or funds listed in it. With investing, your money isn’t guaranteed to grow and there’s a risk you might lose money.