Norma A. Hernández Source: Courtesy
Incredibly, 2020 was an excellent year in the different market indices. THE S&P presented a return in 2020 of approximately 17.12 percent, and the NASDAQ without a doubt the most favored It closed the year with a yield of around 90 percent and at the beginning of the year the indices follow the upward inertia of 2020, presenting yields above expectations.
Theory and common sense tell us that this would be normal in a boom year, but it has been presented in the time of a pandemic catastrophic in the world, where around one million 935 thousand people have lost their lives.
Without a doubt the injection of liquidity in the American Economy through the Federal Reserve that has been of 2.3 trillion dollars has contributed to the extraordinary returns that we observed as of March 23 in the stock markets that were at their lowest point given the gloomy expectations of the pandemic, which they ended with the film industry, tourism, aviation and restaurants among other; Not to mention the number of unemployed that this pandemic has left in the United States. The above leads me to say that the financial markets in 2020 did not reflect the socio-economic reality of the year, Will it be the same in 2021? The answer is contradictory because there are industries and companies that have come out winning during this pandemic year, TESLA became the most valuable automotive manufacturer with a value of 800 billion dollars, technology companies such as Zoom, Microsoft and Twiter the values of their shares rose, as well as the pharmaceutical and healthcare industry and other traditional twists like 3M and Clorox.
The pandemic accelerated the movement that companies and society were becoming more technological, this will mean in the financial markets that technology companies will continue to win and set the standard in the high returns of financial market indices.
Another important question in 2021 is whether companies will fully recover from the breakdown brought by the Covid-19 pandemic.
In the best of cases, if the pandemic ends in the middle of this year, the industries in crisis will not come out easily as is the case of the trade in department and retail stores specialized, while technology and health most likely will continue to rise. To win in the market this year 2021, investors must take into account what type of industry they are investing in.
The author is a Professor in the Department of Accounting and Finance, Campus Monterrey.
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