You don’t need me to tell you that 2020 was a wild year with many changes and surprises. While the details will be different, expect more of the same in 2021, notes Bob Carlson, editor of Retirement Watch.
WCM Focused International Growth (WCMRX) is a top pick for conservative investors in the coming year. This open-end mutual fund invests in a small number of stocks of which the managers consider to be great growth companies around the globe.
The fund seeks to identify growing companies that seem likely to be able to maintain that growth for years. The average holding period for stocks in the fund is about five years.
Investors need to plan for the probability that investment returns in the coming years are likely to be lower than they’ve been in some time, maybe ever.
That’s because interest rates are at historic lows. Returns of stocks and other investments are based on the risk-free rate of return, which is the yield on short-term treasury debt. Over time, returns on stocks and other investments can exceed the risk-free return by only so much.
Only a few pockets of the investment universe are extremely high valuations or in bubble territory. But the strong returns stocks and a few other investments had the last few years aren’t sustainable indefinitely.
The fund has been among the top performers in its category since its inception and is likely to continue the above-average performance.
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An aggressive pick for the coming year is Draftkings (DKNG): It's one of the leaders in online sports betting. Sports betting is rapidly shifting online. Draftikings will benefit.
The company and the whole sports betting sector took a hit in 2020 as most major sports were canceled or limited.
More major sports events should be held in 2021 as the vaccines are rolled out, increasing interest in gambling. In addition, a number of states are permitting sports gambling for the first time. There's a good prospect that New York will do so in the near future.
Despite strong returns for much of 2020, the stock took a steep drop in the second half and should be poised for a recovery in 2021.