Investment Opportunities

Five Key Investment Trends for 2020

2019 gave investors plenty of reasons to celebrate.

As we anticipated, emerging trends like 5G, artifical intelligence, cannabis, cloud computing and e-commerce grabbed headlines.

Some of those performed better than expected. Others didn’t.

But a new year is upon us. And that means it’s time for me and Energy and Infrastructure Strategist David Fessler to share our thoughts on some key trends for 2020.

Dave and I have worked together for more than a decade. Like any two people, we sometimes agree… and other times don’t. We embrace this and aren’t afraid to voice our opinions. That’s what helps to make Profit Trends unique.

We hope our views on these five topics will help investors narrow their focus in 2020…

No. 1: The Stock Market

Matthew: With the 2020 elections looming large, I don’t expect the broader indexes to repeat the strong performance they had last year. Since 1988, the Dow Jones Industrial Average has managed a mere 2.87% average gain during election years.

Dave: I think the markets will take the trade war in stride and power higher. Though I’m betting 2020 will see more modest growth than 2019. I think tech will continue to dominate sector gains, as it has for the past 10 years.

No. 2: Cannabis

Matthew: Pot stocks suffered a truly awful year in 2019. The gains the sector enjoyed during the first quarter were wiped out by the longest – and most painful – bear market in the industry’s brief history. But 2020 should be a more positive year as “Cannabis 2.0” gets up and running in Canada and as U.S. multistate operators focus on sales, not expansion.

Dave: I think that, until the U.S. legalizes pot federally, there’s too much supply. That has driven many cannabis stocks to today’s low levels.

No. 3: Gold

Matthew: In 2019, broader market volatility fueled by ongoing U.S.-China trade concerns and midyear fears of a recession triggered gold’s best performance since 2010. For 2020, I think gold’s gains are far from over.

Dave: I think gold will stay relatively flat based on a continued strong U.S. dollar relative to other currencies. I do believe there are opportunities in a few select gold mining stocks.

No. 4: Bitcoin

Matthew: It doesn’t grab many headlines, but at one point in 2019 the cryptocurrency was up 298%! And it ended the year up roughly 100% – more than several times the performance of the stock market. I think bitcoin, with a reward halving just months away, is going to be more explosive in 2020. This catalyst has triggered massive runs in bitcoin in the past, from gains in the thousands of percent in 2012 to 600% in 2016.

Dave: I’m not a fan of cryptocurrencies in general. I like to invest in things I can touch and feel, or services provided. I’m avoiding crypto.

No. 5: Crude Oil

Matthew: The global crude oil market is oversupplied. And in the past we’ve seen that, when the market is in a glut, crude prices can fall rapidly. I believe crude could fall to $40 per barrel this year (it’s now around $59). If there’s another market share war, like the one we had from 2014 to 2016, expect a move lower.

Dave: OPEC+ (the Organization of Petroleum Exporting Countries and its 10 crude-producing allies) just announced that it was increasing 2020 production cuts from 1.2 million barrels per day to 1.6 million. At the same time, producers in the U.S., Norway, Canada and Brazil are continuing to increase production – essentially sticking it to OPEC+. Frankly I couldn’t be more delighted. The net effect will be range-bound oil prices for 2020.


About

Matthew’s expertise ranges from classic industries such as oil and mining to cutting-edge markets like small cap tech, cannabis, 3D printing and cloud computing. With almost two decades of financial experience under his belt, Matthew’s knack for finding market trends never fails to surprise us, which is why we keep a close eye on his free e-letter, Profit Trends.

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