January 20, 2021
What’s not to like about this list? Trillions more in stimulus, vaccines allowing a back-to-normal economy and a lowering of the political temperature – those are all good things. Yet, last week was a reminder that markets buy ahead of the news, and sell when the facts are revealed, making for a bumpy ride.
Help is on the way. President-Elect Biden announced his stimulus plan, but it merely met market expectations of around $2 trillion. The next step is harder, getting it through both houses of a narrowly-divided Congress. The final figure is likely to be whittled down. But we doubt that will stop the bullish sentiment. After all, investors continue to buy small-caps in anticipation of better times ahead.
January 20, 2021
In the realm of disruptive growth investments, there are a slew of platform-driven companies spanning an array of high octane segments and technologies.
Predictably, stock picking in these spaces is difficult, but advisors can ease that burden with WisdomTree’s new Disruptive Growth Model Portfolio.
“The WisdomTree Disruptive Growth ETF Model Portfolio targets structural growth themes that are believed to drive innovation across different industries and segments of society in the future,” according to the issuer. “The themes and affiliated ETFs selected for inclusion will typically have above-market growth projections. The model portfolio seeks maximum long-term capital appreciation and may include both WisdomTree and non-WisdomTree ETFs.”
Biopharma Here to Stay: The Long-Term Case for the PBE ETF
PBE tracks the Dynamic Biotech & Genome Intellidex Index, which “is designed to provide capital appreciation by thoroughly evaluating companies based on a variety of investment merit criteria, including price momentum, earnings momentum, quality, management action, and value,” according to Invesco.
Due to the high priority of rolling out COVID-19 treatments, some PBE components could enjoy top line growth this year and in 2022.
“As with most viruses, developing COVID-19 treatments has been difficult, but several drugs have shown strong enough efficacy to gain regulatory support,” writes Morningstar analyst Damien Conover. “Historically, one of the best ways to control viruses is through vaccines, and we believe the vaccines emerging will significantly lower the need for COVID-19 treatments by 2023 and beyond. Nevertheless, treatments are in high demand currently and are likely to remain so through 2021 and into 2
Put Away Your Crystal Ball and Adapt as Market Conditions Change January 20, 2021
Volumes have and will be written about the unique events of 2020. It would be a dramatic understatement to acknowledge that none of us saw how the year would unfold. This should provide healthy doses of humility and caution as we read the abundant financial market forecasts for 2021.
Our conclusion is not that homework, analysis, and preparation do not matter interpretation of information matters now more than ever! Instead, the problem lies in the tendency to apply a tight grip on predictions from a specific point in time rather than adapting to new information, data, and conditions. In many cases, what we think should happen does not materialize. Investment success requires careful analysis, a repeatable process, and the flexibility to change a seemingly sound investment thesis as events unfold.