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So which stocks are the best in 2021? Let’s review what happened last year. In 2020 the S&P 500 dropped 34% in roughly just one month which made it the fastest bear market we’ve ever seen, there was a huge sell off due to the pandemic. Almost immediately our government reacted with the multi trillion dollar Cares Act where in 2020 alone, we printed a quarter of the entire monetary supply – in just one year. We went from 15,337 billion in the beginning of January to 19,071 billion at the end of December.
There was now more money in the system competing for the same amount of stuff that was already there before. So if you invested in March of 2020, you very quickly would have made more than 60% returns on your money. The S&P500 finished the year with a growth of 18.29% which again is pretty incredible considering how bad the collapse of the market was.
In 2021, President Joe Biden wants another $1.9 trillion dollars so there’s a good chance that we’ll see more money printing, even if it isn’t that final number. For all these reasons, this is why I’m going to be buying the dip and start dollar cost averaging into the stock market consistently every single month whenever I see an opportunity because inflation is real.
In order to put my money to work quickly, I’ve switched to DRIP which is the automatic dividend reinvestment plan for each of my stocks. Normally when get paid dividends from holding stocks, I try to wait until I collect enough money, then I pick a stock that I feel is undervalued and then use that money to buy a new stock. The problem is I’m often times holding too much cash and I’d rather put it to work so I can generate compound interest.
Why I think the stock market will go up.
#1. Share buybacks. Share buybacks dropped by roughly 41% during the pandemic as the world kind of stopped, but now share buybacks are slowly coming back. This has already been happening in 2020 with stocks like Apple, T Mobile, Google, Microsoft, Regen Pharmaceuticals, Oracle, Berkshire Hathaway and most recently, Netflix is considering it as well.
2. Stocks splits, which I’m sure you’ve probably heard of. I think we’ll see a lot more of those so keep an eye open. Stock splits are going to be the new share buyback program for 2021. We’re going to see companies split their stocks just like we had Apple split 4 for 1 in August and Tesla 5 for 1. We’re going to see tech companies like Google, Netflix or Amazon for example who’s share price is nearly $3,300 at this point and most people are afraid to buy a stock with such a high value – even though we have fractional shares, most people don’t know that.
3. Inflation. 78% of all the dollars in existence today, have been printed, in just the last 10 years. That is crazy. The fed has told interest rates are going to be low till 2023, the Democratic Party has officially taken office, everyone know about the push for stimulus which will also have a lot of people using their stimulus checks to invest.
Obviously, some parts of the economy are going to grow quicker than others, we saw that with tech in 2020. Tech took off and EV – Tesla is up more than 1000% which makes even Bitcoin jealous.
Cyclicals will do well. Cyclicals are stocks that rotate in and out of the economy. For example, consumer discretionary, basic materials, financial Service, and real estate. Stocks like VFC, Polaris, William Sonoma, Target, etc. anything that where consumers go and spend their discretionary income once they’re back to work and they’re actually making money – including restaurant stocks will see a comeback assuming the economy recovers.
The biggest winners beside EV and clean energy is going to be fintech companies. Paypal, Square, Shopify, and banks like Goldman Sachs and perhaps JP Morgan. The one I’m personally most excited about is the Coinbase IPO which I treat like a cryptocurrency ETF.
*None of this is meant to be construed as investment advice, it’s for entertainment purposes only. Links above include affiliate commission or referrals. I’m part of an affiliate network and I receive compensation from partnering websites. The video is accurate as of the posting date but may not be accurate in the future.