Bullish Investors See Opportunities Next Year

Preparing for the New Year
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The head of investment strategy at Wilmington Trust, Meghan Shue, in an interview about the probable state of the market year, was optimistic for the state of investing between now and late 2021 thanks to a wide variety of factors by saying that “‘We’re the most bullish on the market that we’ve been in about a year.”

 

With the combination of vaccine rollouts happening over the next few months, the introduction of the second stimulus package recently passed, and support from the Federal Reserve led the experts at Wilmington Trust to add to it’s overweight position in equities in areas like emerging markets and small-cap stocks for it’s near $125 billion worth of assets. Ms. Shue said that, “United States large-cap stocks, technology stocks, have a lot of really aggressive growth targets priced into valuations at this point.” While also postulating that, “We see emerging market equities and U.S. small cap as having additional upside where a lot of those… early economic cycle benefits are not fully priced in.”

 

There is always the opportunity for investments to sour however and M.s Shue wasn’t shy to mention the possible roadblocks. “This is a challenging period right now as it relates to the virus.” Along with that, “A main risk is that this persists for longer than many people are expecting, well into the first quarter where we have businesses that are shut down for a prolonged period of time.”

 

A third factor for possible instability includes the Senate runoff races in Georgia. Ms. Shue believes that a Democratic sweep would shock some investors. “If we did have the Democrats provide an upset and win both seats [in Georgia], I think you do have to weigh the risk of higher taxes in the future and more sweeping policy change that relates to regulation, energy or health care.” The comments stem from ideas a Democratic trifecta would make those new regulations almost automatic, which isn’t necessarily the case.

 

Finally there is a small issue if too many investors move the same direction “We all kind of appear to be on the same side of the boat, expecting the same things to pan out, so, there is a potential for an upset,” Ms. Shue said. “But we would encourage our clients to be looking through any short-term volatility because that is, at the end of the day, a normal part of investing.”

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