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The new rules of investing for 2021

Published 06 Jan 2021

Heath Behncke, our Managing Director and Portfolio Manager at Holon Global Investments, was featured by Tony Featherstone in the Financial Review discussing “The new rules of investing for 2021”.  Tony preludes the discussion by suggesting that:

“…The first [rule] would be don’t forget the old basics of investing and their enduring value in crises. And the second: adapt those rules for a fast-changing world.

For investors, 2020 terrified and thrilled. The terror came from COVID-19 and the March sharemarket crash; the thrill from the recovery that followed.

Market volatility whiplashed portfolio returns. In Australia, some forecasters tipped collapsing house prices, skyrocketing unemployment and a tsunami of bad debts. Others predicted the demise of office towers, shopping malls and CBDs. For a time, the market valued toll roads and airports like stranded assets, and the tech sector became a defensive haven.

In a world turned upside down, investors could have permanently distanced themselves from the sharemarket, such was the gut-wrenching volatility and wealth destruction.

But those who avoided the market missed the mother of all recoveries. Good vaccine news and signs that the bearish forecasts were hopelessly wrong boosted global equities.

From its March low, the S&P/ASX 200 Index soared 46 per cent. Remarkably, Australian shares will finish the year almost flat – an outcome few predicted.

After such a dizzying ride, investors will hope the market consolidates recent gains. Much depends on COVID-19 containment in Sydney, but a plateauing market will give investors time to catch their breath and plan their 2021 strategy…”

Tony goes onto quoting Heath saying that “…COVID-19 has brought forward at least three years of changes in consumer behaviour. Cloud computing and healthcare are good examples: both industries have had years of change condensed. Portfolios that don’t have exposure to digital-infrastructure trends will underperform…” Additionally, “…the pandemic will drive demand for digital currencies. Australia will have negative interest rates within five years and that will unleash a spike in asset-price inflation. More investors will include Bitcoin in their portfolio as a digital form of gold to protect their portfolio against the risk of accelerating inflation and declining purchasing power…”

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The full article “The new rules of investing for 2021” can be accessed here.

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