Investment Tips and Trading Trends for 2021

2020. Truly a historic year for markets, the economy and the greater world. Many industries have all but died, while areas like DIY investing have absolutely taken off across Canada. Looking back at the past year can tell us a lot about what is in store for 2021 and beyond, including where to keep an eye on and how to make a mindful investment. As we always say at TradingView, it’s essential to analyze the past to chart a successful future.

Look Back to Look Forward
This year, the pandemic accelerated the natural conclusions for many industries that have been slowly declining, namely those which could not pivot or digitize fast enough. The most pertinent example being large retailers such as J.C. Penney, Neiman Marcus, Le Chateau, and ALDO, all filing for bankruptcy this year. But this shouldn’t shock investors—department stores and retailers have been in decline for years. It was only exacerbated by pandemic restrictions plus a slowing economy and the explosion of e-commerce (hey, Shopify).

2020 also saw entertainment and travel industries—notably Cineplex and Air Canada—took a dive as a result of domestic and international travel restrictions. Likewise, while there is somewhat of a rebound recently, we will likely see long-term secular shifts in the entertainment industry, with companies such as Warner Bros. premiering their entire 2021 blockbuster lineup on online streaming services.

The Rise of the Gen Z Investor
With all these lockdowns taking place, consumers have radically pivoted their interest in financial markets. This has truly been the year of DIY investors—particularly millennials and Gen Z who are more financially independent than ever and are taking investing into their own hands. There are two major factors in this: the technologies available, and the lack of returns in passive management.

With the current state of the economy, central banks have moved global interest rates to record lows, making it nearly impossible to eke out a return from these passive instruments (bonds, treasury bills, etc.). As a result, investors have been continually shifting to active management, seeking reasonable returns on their investments.

More importantly, the investment technologies available to the public are the best they have ever been; investors have the highest amount of information for the lowest cost, ever. Institutional investors no longer “hold the keys” here, and millennials and Gen Z are capitalizing on these opportunities by taking their future into their hands.

Looking ahead, investors using DIY platforms like Wealthsimple Trade and Questrade will continue to seek additional services, like TradingView, to conduct deeper research and make more informed investment decisions. We’re continuing to deepen the research landscape; recently launched Timelines to help investors analyze histories of the world’s largest public companies, including Shopify.

Industries to Watch in 2021
On the Rise: Cannabis, Renewable Energy, Tech

Central banks and the US election have given markets a strong indication of which industries to look out for in 2021. Both cannabis and renewable energy were legislative focuses in the US, and this will affect Canadian markets for both industries. The Trudeau government also re-emphasized its commitment to Canada’s long-term climate goal by raising the carbon tax, which is good news for those who are looking to invest in the renewable energy sector.

The Hard Hit: Oil and Gas, Financials

Industries to be wary of in the coming year are oil and gas and financials. With the push towards renewables, the flip side is the decline of the oil and gas sector. As for financials, the Bank of Canada recently announced that it will keep its 0.25% interest rate, maintaining its pledge to stay low until 2023. The low-interest-rate environment combined with slow economic growth means that there aren’t a lot of catalysts for banks other than M&A in the near future. Additionally, the rising prominence of upstart fintech means increased competition for the traditional players.

The Toss-Up: Cryptocurrency

Cryptocurrencies and crypto assets in 2021 will depend heavily on company adoption of the space, such as Square’s merchant network, Paypal’s Bitcoin purchases, and Facebook’s Diem (previously Libra). Otherwise, it is tough to forecast 2021, as 2020 was already such a substantial year for the sector.

Use Every Resource

Investors now have far more resources than at any time in history to make smart, educated decisions.