Keeping Your Portfolio In Check
With the economy continuing to heat up as more people get the COVID-19 vaccine, there’s a feeling among some investors that stocks are about to explode. But should you buy into the hype?
The S&P volatility index, sometimes referred to as VIX, is currently showing its lowest valley since the pandemic began. Encouraged by a sharp uptick in consumer confidence, investors have been shoveling money into the markets like there’s no tomorrow.
But just because there’s a light at the end of the virus tunnel doesn’t mean we’re in a period of smooth sailing. All it takes is a little bit of inflation to spook markets, which in turn can cause people to tighten wallets.
One thing is for sure – we live in uncertain times. You may think things are going one way, but they end up doing something else. Given where we are now in 2021, here are 3 stock trends to consider for the remainder of the year.
1. Telehealth will continue to be big
Because of COVID-19, many consumers in 2020 received medical and mental health care online – otherwise known as telehealth. Moreover, insurance companies were happy to pay for it.
So, what will happen now as the pandemic begins to fade? Will telehealth go away? The simple answer is – no. Telehealth is here to stay and is predicted to massively grow over the next decade.
What remains to be seen is how insurance companies will pay for services. Will there be a reduction in how much they pay providers for remote services? Will in-person visits be covered at a different rate than virtual?
We don’t know the answers yet, but we do know that a recent survey showed over 75% of Americans were interested in using remote care going forward. Keep your eye on this sector because it’s going to remain big.
2. MEME stocks will fade
Did you get caught up in the meme stocks? Did you realize gains from AMC, Game Stop, or Silver? If so, you aren’t alone. Lots of investors got caught up in the craze, particularly newbies who were looking to make a quick buck.
That said, MEME stocks look like they are on the fade. In the general sense, these kinds of investments gain popularity through massive hype. What else explains a 900% surge in GME since the start of the year?
But as the economy begins to expand, fueled by massive consumer spending, there will be plenty for people to crow about that is built on the fundamentals – and not hype.
Millions of Americans received some form of stimulus as part of the 1.9 trillion-dollar American Rescue Plan. According to a recent survey, 52% will use the cash to pay off debt. Another 28% say they will spend it (in some form). The remaining 19% plan on saving it.
What does this mean? A large number of people will be buying things. Think televisions, computers, phones, airline tickets and, hotels. Look for an uptick in sectors like consumer goods, including retail.
3. Blue chips will grow
In a nutshell, blue chip stocks are stocks of well-established and well-known companies. They have a history of delivering over the long term and often pay a dividend.
As the nation recovers from the pandemic, there seems to be a yearning for a return to stability. A pathway can be found in blue chips.
Think Apple (APPL), Berkshire Hathaway (BRK.B), Coca-Cola (KO),and Walt Disney (DIS). Some investors are buying these types of stocks individually, while others are opting for a more passive approach ETFs. One that I like is the Fidelity Blue Chip Growth ETF product (FBGC).
At any rate, increases in consumer confidence historically have translated into big jumps in Blue Chips. This makes sense because as people feel more comfortable opening their wallets, they often gravitate to the familiar. Blue chips offer this in spades.
At the time of this post, the virus numbers among the population continue to be volatile. If roll-out plans for massive increases in the vaccine materialize, the scientists tell us COVID-19’s impact will begin to fade.
But if we’ve learned anything in recent years, what we think will happen and what materializes are two different things. Most personal finance experts suggest having a decent amount of money in cash, like a six-month emergency savings fund.
Do you have one? If not, there is no time like the present.