Did you see the pandemic? One way or the other, COVID-19 has impacted human life for at least the next few decades. For an investor though, you’re more likely thinking about how to leverage the opportunities in the markets or avoid the threats thereof.
As consumer spending increases in the wake of the pandemic, the expanding digital economy and a critical mass of millennial investors look set to be the force behind stocks in the coming years. Your participation depends on what you make of the post pandemic fall.
Investors are inclined to focus on daily headlines about the post-pandemic reopening and economic recovery. Yet, it’s advisable to tread carefully and critically consider the longer-term effects of COVID-19. As an investor, your concern should be less about what it means for the stock market in a short time frame than about it’s impact over the medium to long term.
Morgan Stanley Wealth Management analysts see massive opportunities for stocks and predict three mega trends for you to consider while investing in the years ahead.
1. Rising Consumer Spending
Unrelenting strong consumer spending is the most immediate driver of economic growth and stock prices. Direct government fiscal stimulus injections into private wallets helps lower-income consumers to afford life’s basics.
In addition, the vaccine rollout and reopening of major and local economies also drives spending on a range of services. This consumption is especially in the higher-end demographic. For instance, US GDP growth is expected to peak at 7.1 percent as rising labour income bolsters the buying power of households and excess saving continues to be a crucial cushion.
Consumers in the pandemic aftermath are not dealing with defaults or high debt, and banks maintain strong financial fundamentals. They’re also ready to lend to both businesses and individuals in order to catalyse economic growth.
Savings rates grew nearly 500 percent during the pandemic and as the pandemic eases, it’s easy to see this dropping off and finding equilibrium where it counts.
2. Digital Economy Expands
Pre-2020, the world was comfortable with the way things were. Those days appear to be lost in the chimes of financial history. Digital transformation has picked up pace in the consumer and corporate arenas. Some analysts see this as a sign that business models fully expect permanent changes in the consumer preferences and accelerating trends in SaaS and e-commerce.
It is anticipated that there’ll be wider adoption of automation, collaboration tools, data analytics, and technologies like cloud computing.
Companies are continuing to have conversations about remote work and overhead seems to be more manageable than was the case pre-pandemic. This technology spread is happening across industries, essentially making a case for a bullish outlook even with a post-pandemic fall.
Tech stocks will continue to soar as the case for digital services becomes stronger than investors and other stakeholders imagine.
3. Millennial Investors Taking the Reins
Young traders are using the immense power of social media to inspire stock rallies, so the post-pandemic fall is barely a threat since these traders have modern tools to engage in the markets. The equity investor demographic has grown to become bigger than it ever was.
Millennials born between 1981 and 1996, and Gen Z, accounted for 42 percent of the US population. Bearing in mind the experience with Baby Boomers, further stock market inflows seem quite likely, though the size of gains recorded when the Boomers were young do not seem feasible today.
There are more millennials in the workforce today, so that accounts for the expanding equity investor base.
How Should You Prepare?
Fiscal spending and Fed-backed inflation could support resurgent growth, albeit with shorter cycles. Inflation is still rising from its lowest lows in history, though stocks have been impressive despite rising inflation.
It looks like this is the time to snap up assets that are likely to benefit from longer-term shifts as we see in consumer spending, digitization, and demographics.
Note: Please do not invest money or assets in the financial markets that you cannot afford to lose. This article should not be construed to be investment advice and is for information purposes only