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  • 2020 is finally over.

  • And frankly, a lot of investors would rather never

  • speak of it again.

  • The outlook for 2021 is much brighter.

  • Investors broadly think it's going

  • to be a good environment for global stocks,

  • the worst is behind us after all.

  • But last year taught us the pessimism pays.

  • So what can go wrong?

  • The first thing is that it's not generally a great idea

  • when investors broadly agree with each other.

  • And right now, they do.

  • The vaccine is going to be difficult to roll out globally.

  • The virus itself is still biting into the global population.

  • And the damage on companies and economies around the world

  • is going to take time to shift.

  • If any of these things deteriorates

  • more than the market currently anticipates then

  • you're going to see a lot of investors

  • heading for the exit from risky bets all at once.

  • Central bankers saved the day in 2020

  • alongside finance ministers when they

  • pumped trillions of dollars into the financial system.

  • The issue now is whether they can hold the line.

  • If we see any signs that they might pull back

  • on that support, then you could see a serious wobble

  • in markets.

  • We've seen this before in 2013 with the famous Taper Tantrum,

  • and we could easily see it again.

  • Rate hikes are basically a non-starter.

  • But if you just start to hear a little bit of uncertainty,

  • watch out.

  • Then there's inflation.

  • Now, this has been the market's bogeyman for years.

  • People have been saying it's going to make a comeback ever

  • since the crisis of 2008.

  • And they've been wrong every time.

  • But maybe this time is different.

  • And if it is, you could see a real hit

  • to the government bond market and, potentially, also

  • to equities, too.

  • It's a tail risk, but it's worth watching.

  • Then there's politics.

  • And in this regard, keep a really close eye on US big tech

  • stocks, which really dragged the markets up

  • from their lows of March last year.

  • The new administration in the States

  • is, some investors think, more likely to impose taxation

  • and regulation on this sector.

  • Now, all of this, all of the extra spending that the US

  • administration might bring through,

  • could be great news for different stocks -

  • for small-cap stocks, for sectors that have

  • underperformed over the past few months.

  • But any damage to big tech, which

  • makes up such a big part of the US market,

  • is definitely worth watching.

  • Then there's the dollar.

  • It's been sliding for months, but some investors

  • are starting to wonder if it could

  • accelerate and really jack up other currencies

  • around the world.

  • At a certain point authorities in other countries

  • will really start to bristle at this.

  • And they might start to push back.

  • So watch out, and good luck.

2020 is finally over.

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B1 UK FinancialTimes market big tech broadly administration damage

five things investors are worrying about in 2021

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    洪子雯 posted on 2021/01/08
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