What’s in store for the markets in 2021 … three predictions from Matt McCall … the best way to generate wealth in any year
Are you ready for a “massive boom” of economic growth in 2021?
Are you equally ready for a stock market crash of 42% in 2021?
Yes, we’re at year-end, which means prepare yourself for the onslaught of market predictions!
As to the “boom,” that’s what legendary macro trader and billionaire, Paul Tudor Jones, is anticipating.
Last week, in an interview with Yahoo! Finance, he said:
I think the stock market’s on a combination of fiscal monetary pulse that we’ve never seen before in history, nothing like this …
The vaccine’s going to bring us back. We’re going to have an incredible growth rebound …
… you’re going to have this just massive boom.
And what about that 42% market crash outlook?
That’s from the team over at ValueWalk.
Here are more details:
There is a 14% chance of a 42% stock market crash happening in 2021 …
If we look at valuation, the probabilistic outlook is very, very bad from a long-term perspective. The market is at the most expensive levels, it has ever been.
In today’s Digest, let’s bring the predictions closer to home.
Our trend investing and technology expert, Matt McCall, just came out with 20 “2021” market predictions in his latest Investment Opportunities issue.
While we can’t reveal all 20, we’re fortunate that Matt let slip three of them in the latest issue of his free newsletter, MoneyWire.
So, as we’re now just 25 days away from 2021, let’s peek into Matt’s crystal ball to see what he’s expecting for next year.
***Prediction #1 — get ready for two market corrections
Regular Digest readers know that Matt is incredibly bullish on certain sectors of the stock market. Unfortunately, that doesn’t mean those bullish gains will come in a straight line in 2021.
Here’s Matt’s take:
I believe it will be (a profitable 2021 in the market).
But you can have a profitable year and still have corrections. In fact, most years have at least one …
For 2021, I’m upping my prediction to account for increased volatility and the higher probability of two pullbacks of at least 10%.
We’ll have a new presidential administration, the vaccine rollout could hit a bump or two, and the stock market could get frothy at times. All are possible reasons for a correction.
To give you greater perspective on these corrections, take a look at the below chart from research group, Morningstar.
What you’re going to see is the S&P 500’s return at the end of each calendar year since 1980, compared with what was the S&P’s largest intra-year drawdown during each year.
Notice that there are nine years in which the S&P ended up double-digits, after having been down double-digits.
You’ll also see that going down 7%, 8%, or 9% — yet ending the year positive — is incredibly common.
So, if Matt’s right, expect 2021 to be bumpy, yet profitable. This is important to keep in mind when those bumps come.
Back to Matt on how to view them:
… you can probably guess what I’m about to say next.
Every correction will again be a buying opportunity if you’re investing in hypergrowth stocks for big profits over the long term.
***Prediction #2 — small-cap stocks will outperform
To make sure we’re all on the same page, “cap” refers to “market capitalization.” It’s a measure of a stock’s size.
You arrive at this figure by multiplying the number of a stock’s outstanding shares by the price per share.
On one end of the spectrum, you have a colossal mega-cap stock, like Apple — valued at almost $2.1 trillion.
On the other end of the spectrum, you have a tiny nanocap stock, like Acer Therapeutics, valued at just $32 million.
The label “small cap” typically describes stocks with a market cap ranging between $300 million and $2 billion.
With that context behind us, here’s Matt:
So far in 2020, small caps and large caps are fairly even. But over the last six months, small caps have crushed the larger stocks.
I believe that will continue in 2021. In fact, I think small-cap stocks are in the early stages of a multiyear bull market.
This is great for investors. Small caps provide many more opportunities at life-changing gains. That’s because there are much greater inefficiencies in how investors value small caps.
But it’s not a rising tide that lifts all boats.
To fully capitalize on the trend, you must identify good stocks … which is exactly what we intend to do.
Small caps can be explosive. Their smaller size means that a sizeable chunk of investment dollars can cause a stock price to race higher, whereas that same amount of investment dollars would do little for a mega-cap stock.
Matt has a service dedicated to the combination of technology stocks and small-caps stocks called Early Stage Investor. The service boasts a litany of triple-digit winners this year — I’m looking at the portfolio as I write, seeing gains of 217%, 257%, 352%, 521%, 568%, and 679%, to name a few.
You can learn more about Matt’s small cap stock picks here.
***Prediction #3 — Congress will pass a massive infrastructure/clean energy bill
Matt writes that we should have already seen an infrastructure bill at this point. Unfortunately, he points toward politics as having gotten in the way.
But he expects that will change in 2021:
… in a Biden administration, the focus will be on clean energy — solar, wind, hydrogen, electric vehicle charging stations, etc.
The House did pass a $1.5 trillion infrastructure bill in July, but it didn’t make it out of the Senate. While the same thing could happen in 2021, I have a strong feeling the spigots will be open all the way and money will be flying.
To prepare for this, you want exposure to sectors that should benefit from all that money sloshing around — like solar, wind, hydrogen, electric vehicles (EV), cement, and engineering firms.
I’m now looking at Matt’s Investment Opportunities portfolio. He has an entire sub-portfolio dedicated entirely to solar power and clean energy with the average gain up more than 35%.
Even better, the portfolio boasts a tiny stock that’s already up 147% … since Matt recommended it on October 1.
There’s a second sub-portfolio dedicated purely to batteries, which plays directly into the electric vehicle trend. The average return of this portfolio of six stocks is 128%.
Here’s more from Matt on this battery opportunity:
Without the advancement of solid-state batteries, next-generation transportation would be impossible …
I’ve been all in on the EV trend for a while now. They are the future of transportation, and they will be made possible in large measure by next-generation battery technology.
Insiders are already calling this potential new battery a “paradigm shift” in energy technology. Forbes calls it simply: “The battery that could change the world” …
Folks who get in on this breakthrough now — BEFORE it’s rolled out on a mass scale — will have the chance to be a part of perhaps the single largest legal creation of wealth in the last 25 years.
Wrapping up, I expect we’ll be getting more 2021 predictions from our stable of analysts in the days to come, so stay tuned.
Also, be looking for picks for our annual “Best Stock for 2021” contest. As for 2020’s contest, as I write, Eric Fry is leading our branded analysts with an 89% gain from Freeport-McMoRan.
Returning to 2021 forecasts, let’s end with Matt’s prediction for how to build wealth next year:
(It will be) by investing in long-term hypergrowth companies and holding them through their ups and the downs.
That was true in 2020, and it will be true again in 2021.
That’s a prediction I’m highly confident will stay true for years to come.
Have a good evening,