This week, I’m talking about the 2021 Stock Market & Economy Outlook.

Today, I’m talking about some likely losers in 2021. At the end of February 2020, the stock price for Zoom was just over $100/share. If you had a crystal ball and could see into the future and see all of us on our Zoom calls, you would have made serious gains in the stock this year as it jumped from it’s pre-pandemic $100/share to nearly $600/share in the fall. But the stock has since dropped back down to $350/share as of this recording. 

The stock appears to be overvalued with a lot of investors driving up the stock price by piling in to the stock this year. But with a price to earnings ratio and other valuation metrics skyrocketing, the current price doesn’t seem justified. 

So I think in 2021, there will be some investments out there like Zoom, or DoorDash or any other covid darling that benefited from the obvious Covid trends, but whose valuations got so stretched that the stock price wasn’t justified and may drop significantly once the economy begins to return to normal. 

So I call these covid-bandwagon stocks and I would tread lightly here and make sure if you own stocks that benefited greatly from Covid and the lockdowns that the stock’s value has not lost touch with reality. 

I’m also not a big fan of the big tech stocks. The likes of Google, Facebook, Apple & Microsoft have experienced years of outperformance, and as I mentioned earlier this week, the music has to stop at some point. 2021 could be the year that tech stocks finally slowdown - after a big run up in 2021, investors could take profits, and there is a greater potential for antitrust litigation for these tech giants that could hamper profits and destroy confidence in these bubble-like stocks. 

The biggest problem with Big tech stocks is that it’s likely that your S&P 500 index fund or your target date mutual fund you own in your 401k is loaded up with these stocks - as the FAANG stocks (Facebook, Amazon, Apple, Netfilx and Google) now make up more than 15% of the S&P 500 index. 

So just be mindful of that and consider rebalancing if you own a tech heavy portfolio. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip.

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