3 Most Important Goals For Investors In 2021

Last 12 months have been real test for everyone. It is has been hard for investors. GDP growth in the world has vanished and no one is sure what will be the recovery. Also when you start new year the first thing is to set your goals. In the end of this strange 2020 lets talk about the 3 most important goals that we believe every investor should have in 2021:

Preserve your wealth – it has been real rollercoaster in the 2020 and it seems the excess volatility will continue well into the next year. THE most important goal you should have in 2021 is to preserve your wealth! We don’t know what will be the market direction in a month or 3 months, so stay on alert and watch over your investments. Good idea is to make hedges or use stops more rigorously. Make sure your portfolios are well optimized, don’t just buy stocks randomly.

Control Systematic risks – as in any crisis there is a increase in correlation among assets. This correlation is actually due to increased exposure toward systematic risk factors. Put it simply stock prices are more dependent from major indicators like market movement, oil price, bond yields, gold etc. Especially strong is the dependency from the general market movement, this is very big problem for you. It means that you cannot diversify the risk of your stock, since all of them are moving in a bunch. Compounding the issue is the uncertainty in these systematic factors, both stock market (as a whole) and oil prices have very high volatility and this can really harm your investments. Thus it is very important to try to control these systematic factors with hedges or picking stocks/sectors with low betas.

Get upfront the recovery – although we don’t know what will happen with the stock market in the next 3 months, we are certain that sometime in the second half of 2021 we will see more economic recovery. This recovery will drive the stock market up! So all investors will see increase in their investment returns. But do you want to be just another investor in the herd?!? There is a huge possibility to achieve alpha (superior return), usually additional volatility just before recovery period (as it is now) give great opportunities to get returns higher than those of the market. Use tools of active management to get exceptional alpha return.

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