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17/11/202012 mins

[Video] Opportunities for investors in #Contrarian2021

As contrarian investors, we are always wary of fads and trends. We focus on the stocks that are unloved and underappreciated – but have a catalyst for change that others miss. As we look towards 2021, we have singled out three key areas of the market where we believe  the best opportunities may lie.

A revival of ‘value’

After precipitous falls in the second quarter, stockmarkets have made a swift recovery from their lockdown-induced lows.

As you might have noticed, this recovery has been concentrated around a small number of US technology and internet stocks – including the FAANGs that have come to epitomise the market’s hunger for growth at any price. By contrast, ‘value’ areas of the market remained out of favour. The market views these stocks as somewhat boring, when compared with the hot ‘growth’ themes that have rallied over the past decade, and lately as working-from-home stocks.

Our Manager discusses this phenomenon and the potential triggers for a reversal in these fortunes, covering the latest positive news on prospective vaccines.

Hidden gems in the recovery

Few areas of the market have been untouched by the pandemic, and many companies have faced a stark choice: evolve and thrive or fall by the wayside.

For many businesses, the pandemic has provided the impetus for improvements that have long been required – to re-size, re-negotiate contracts, to digitalise and, on some occasions, to overhaul business models to operate effectively. Meanwhile, these and many other quality stocks are still overly downbeat as the prospect for consumers’ return to normality remains uncertain. The market’s yet to re-appraise the underlying value of these companies and their potential for significant upside.

Our Manager covers a few notable additions to our portfolio recently, including Capri Holdings, Ambev and Banco Santander.

A golden decade

Gold has lived up to its safe-haven status this year, offering investors a refuge from the volatility brought by the pandemic. As we see it, the current environment provides all of the ingredients to support gold prices longer term.

Amid Covid-19, policymakers have embarked on a spree of fiscal spending that’s unprecedented in peacetime. The pandemic’s dampening effect on the economy is deflationary, but as those effects subside, inflation will re-emerge. In this context, gold represents a currency sheltered from the debasement of fiat currencies that will inevitably result from unfettered money printing.

Can gold become the trade of the decade? Find out more in the video below.

Please remember that past performance may not be repeated and is not a guide for future performance. The value of shares and the income from them can go down as well as up as a result of market and currency fluctuations.

Please note that SIT Savings Ltd is not authorised to provide advice to individual investors and nothing in this blog should be considered to be or relied upon as constituting investment advice. If you are unsure about the suitability of an investment, you should contact your financial advisor.

Subscribe to our newsletter

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We respect your privacy and do not sell, rent or loan any information collected on this site and your data will not be used in ways to which you have not consented.

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