A brief look back at the trends that shaped the equity markets in 2020, and what lies ahead for 2021 and beyond.
Three major market/technological themes dominated the tape in 2020:
FinTech, Artificial Intelligence (AI) and innovations in
Transportation and Energy Alternatives.
Investors poured record amounts of capital into
FinTechs this past year, with nearly 100 "mega deals" (>$100m) in 2020, according to research by
CB Insights. At the same time,
Statista estimates the global market for
AI software will grow by over 50% in each of the next few years, expanding to an estimated $126B by 2025. Next generation
transportation and energy plays, such as electric/autonomous vehicles and alternative power, were also hot topics.
Whether it be
Robinhood's unfathomable $11.2B valuation, the 7-fold increase in shares of
Square, Bitcoin's 5x rally, the exuberance of tech-driven IPO's, such as that of AI-innovator,
C3.ai, or the dramatic 700% surge in
Tesla's stock, it's clear the Street couldn't get enough of these market leaders.
It is my firm belief that we're in the early stages of yet another massive technological evolution...one that will make the advancements of the past 10 years – as impressive as they were – seem mild in comparison. The pace of change in how we communicate, work, transact, commute, and power our lives will undergo dramatic transformations in the decade to come, and 2021 is just the beginning.
The disruptive technologies I've discussed thus far are not merely "fads;" they are here to stay. Many legacy industries will be at risk, and the entrenched leaders of the past 100 years will need to quickly adopt and innovate, or they will perish.
The opportunity I see for investors over the coming 12 months will be in identifying the "hidden gems" within these aforementioned spaces. One such area lies in the supply chain, such as raw materials like aluminum, cobalt, manganese, nickel, lithium, graphite, silicon and quartz, just to name a few, and the companies that mine, refine and transport them. Even further down the chain are the industrial giants that build the engines, turbines and other heavy equipment that enable said production and transportation. Change is coming, and it's coming swiftly. The only question...will your portfolio be properly positioned to take full advantage?
Samurai helps investors navigate the market
All of this excitement isn't to say there's no reason for caution, however. A looming fear that keeps me up at night are the "unknown unknowns." Those things that we don't know are out there, and even if we did, we wouldn't know exactly how to identify them or deal with them expeditiously enough to curtail them. Explosive civil unrest in the US, another devastating pandemic, targeted cyberterrorism...something else we can't even imagine? The list, by definition is endless. And while I remain bullish on US equities for all the reasons outlined above, there are signs brewing in the market that point to this current cycle being near its top. If my 20 years' experience in this industry has taught me anything, it's that "bubbles" can go on for much longer than most think...BUT...they do always burst. Samurai's cutting-edge solutions can help you navigate these unknown unknowns.
Proactively positioning your portfolios to most efficiently generate returns while still maintaining a balanced risk profile is more important today than ever. Samurai's powerful AI-engine leverages machine learning to produce signals and indicators that empower users with predictive intelligence for long/short ideation, confirmatory research, market-timing, position-sizing and risk/hedging analysis. We are leading the next generation of AI-driven research and predictive analytics, helping market participants better define risks, identify opportunities and most importantly, generate outsized returns.
Adam Frederick, Co-founder & CEO, Samurai Data Analytics
