7. 2021 Outlook (Investing Edition)

Hugh Sifu: [00:00:00] Hey, guys. Thanks for listening to Thoughts of a Random Citizen. I wanted to remind everyone that the ideas expressed in this show are just thoughts from a random citizen. While I do have my areas of expertise and do my best to research thoroughly before each episode, this podcast is designed to stir conversation and provoke your mind. These are just thoughts that pop in and out of the head of an everyday citizen. Please keep that in mind when listening and understand that facts and logic rule the day. Thanks for keeping an open mind and happy listening.

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All right, guys, welcome back to another episode of Thoughts of a Random Citizen. My name is Hugh Sifu, and I will be the host of this podcast today, as well as every day you hear this podcast, but anyways, I was going to do a episode that was going to be half market outlook, half travel. However, when I started recording, I realized that the market outlook was going to be hard to squeeze into 15 minutes as well as travel.

I recorded the episode and it was just all rushed from start to finish and I didn't really like it. I'm actually going to split those up into two different episodes for you guys. I can go a little bit deeper dive onto the market outlook as well as a follow-up episode after this that will be about specific travel in Australia, primarily. Without further ado, I will kick it off.

The importance of financials during inflation. That's going to be the main theme here. Everything is going to be based around the fact that with the government printing a lot of money, [00:02:00] we have to hedge against it, be prepared for it. Not only is the government wanting to print a lot of money and this doesn't apply just to the US. This applies to Australia, this applies to the UK, all of Europe, governments around the world are at the moment, printed a bunch of money.

Specifically in the US, which has the biggest market exchange in the world, they are trying to use the dollar to or they are using the dollar to not only forgive or print a bunch of money but forgive a bunch of debt. Student loan debt, mortgage debt, commercial real estate, new retirement programs on top of giving people stimulus checks with dollar bills. That is a recipe for future inflation 100%. When that inflation hits, now, that is the important part.

As you probably know, you can't really time the market. You can try and if you succeed, then great, let me know how you do it, but just understand that in this next stage, invest with an emphasis on undervalued companies. Remember that you need to have your assets in an area that won't get destroyed if you will. Is it the time to buy Tesla? Probably not. Is it the time to buy Zoom and PayPal, [00:04:00] all of these extremely over-inflated high valuation stocks? Probably not. Is it the time to jump into EV stocks or augmented reality stocks or companies that just don't make money, and they don't plan on making money for a few years out? Probably not.

Can you make money in these areas? Probably. Be aware that you got to keep your emotions in check in this time. If you start trying to time the market now, you will probably fail. It was easier to time the market last year when it was just going up, up, up, but I expect a lot of volatility in the coming months and years. I'm really looking at value stocks over growth stocks in the future. I actually really like the investment opportunities coming out of Europe for a couple of different reasons.

One is primarily because of their stock valuations at the moment. They haven't quite reached the US valuations, and I see a lot of opportunity for value play in European stocks. On top of the lower valuations, I also like their position moving forward, primarily in regards to their essential piece in the China-US tiffel, and pretty much they're going to benefit heavily. I think that they're going to--

Well, if they can fix their [beep] [00:06:00] they're going to essentially have a large say in the economy moving forward because China and the US are probably going to be fighting over the EU, essentially. I really like that aspect of things as well, specifically in regards to the global economy. I also think that with the new administration in the US, we will see the future more focused again around that globalization aspect. However, I think that the globalization aspect in regards to China will be a vastly different picture that won't be beneficial to China.

I see more opportunity in the EU, so keep that in mind. I'm not a huge fan of-- I don't want to say I'm not a huge fan of growth stocks because growth stocks are obviously-- they've had their run and they're going, I think, to continue to have their run, especially in the near future. In the long term, whether that pays off or not, I'm not sure. I have definitely cut back on my growth stocks, especially in regards to growth stocks that don't make money. That's the main thing.

There's obviously going to be opportunity in growth stocks, but if the market does take a turn for the worst, I want my money in stocks that make money. I think that you should all keep that in mind as well when we're at the stage that we're at in regards to government stimulus, just be careful because the market can take a downturn. Whether it does in the next few years, but be careful and remember cash is king.

[00:08:00] If you do go about that, and meaning growth heavy, I would recommend having a bit of cash on the side so if it does take a term for the worst and you are in primarily growth stocks that don't make money or have a good chunk of your portfolio in that area, then you can at least scoop up on a downturn, good value stocks that will make it through a recession or depression.

In regards to another thing on value stocks is I really do think that those are going to be the winners of 2021 because we are in an environment like the 2000 bubble that if we remember, valuations skyrocketed on any tech company and then valuations on everything started to skyrocket and then pop. If that holds true again, which I'm not saying that it necessarily will, but if you hear the talking heads, everyone is starting to look at value stocks because why would you buy a company that is 200 times its earnings?

You just got to be-- I feel like that's common sense. Just be aware that in the environment we're in, in a bubble possibly looming in the future, value stocks will follow the valuations of everything else. If it does pop, you're at least going to be in stocks that will make it through.

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Specific industries and stocks that I like for the upcoming future. I think commodities are going to be pretty [00:10:00] important and big in the near term, especially with all the stimulus headed towards EV electric and renewable energies, commodities are going to be big in that space. Copper is used in EV, silver is used in solar. These are also just going to be basic fundamentals of hedging against that inflation as well. Not as much copper per se, but we are going to have infrastructure building as well, which will be a boost to copper. Then silver is not only a precious metal but used in solar. That will also help hedge against inflation as well as sea growth.

In regards to other industries, I like finance as well. Specifically, JP Morgan. They are getting into or they're more of leaders in regards to other financial institutions on digital currencies. I like where they're looking there. On top of that, with the new administration coming in that by the time this is released, we'll probably already be in, they are going to get a lot more money to the financial industry in general. That will help boost them as well. Less regulations are going to be restricting the investment opportunities that these financial companies have. That will also allow them to branch out a bit.

Besides finance, I really am interested in the near future in [00:12:00] weed stocks. However, unlike everything you are probably hearing about investing in US weed stocks. I was in that train a few years back when it was Canada, everything, Canada, and I feel the same thing happening in regards to the US.

One company I'm specifically looking at is Tilray. They are extremely undervalued still from their pre-pandemic levels. Not only that, they are getting new leadership and a merger with Aphria that will make them the largest weed company in the world.

However long that lasts, I'm not too worried about that title of the largest because they are branched out, one, all through Canada. They have partners for medicinal in the EU in Australia and in South America. They're well-positioned all around the world and after the merger takes place, they are supposed to reestablish their headquarters in the US because they are preparing for when that eventually becomes federally legal. They're saying don't invest in Canadian weed stocks because they're going to be behind on implementation in the US, but I just don't think that that's going to be a problem with Tilray.

On top of that, I really think that when legalization does come in the next 5 to 10 years, I think that weed drinks will be very prevalent. I think that it will be more of a thing to go out to bars and there'll be more drinks mixed with them. I think it's a huge industry that instead of people going out and getting [00:14:00] hammered drunk, they're going to be going out and getting super high while drinking fun cocktails, beers, you can mix it with everything. I think that that is going to be a future that isn't really discussed with the weed industry and weed drink specifically.

If you know anything about Aphria, they are extremely involved in that. Again, Aphria and Tilray are merging. I look at those because I do think that because everyone is investing in US weed stocks, it is quite overvalued just like it was in Canada a few years back. Lastly, I don't think that the current administration is going to really mess a whole lot with federal legalization, if anything, they'll decriminalize it, but that won't do much to help industries outside of medicinal. I don't see that being a thing for the next few years, but enough with weed.

Bitcoin. I think that that is going to be-- Honestly, my prediction is it's at least going to pass $100,000 by the end of the year. Where we're currently at, around the $40,000 mark at the time that this is being recorded. I think it's at like $37,000 today, it just went through a dip. This is January 14th. Where we're currently at is higher than it was in the last having cycle. I think that with more institutional money, it's just going to increase and be a safe haven for the near future.

I really just don't see the Biden administration touching Bitcoin with a 10-foot pole. There's really just no [00:16:00] benefit to them. It's going to de-incentivize investments in the dollar and incentivize investments away from the dollar into Bitcoin and essentially give an out for foreign countries who are tired of the standard platform to get away from it, one that can be internationally recognized. I just don't see them. There's a lot of things that you can say or not say about Bitcoin, I guess, but that's just my personal view of it.

If anything, I think that Bitcoin will actually be getting purchased by the US government because as we've seen before, world currencies do eventually come to an end. If we did go to another world reserve currency, I can't imagine it would be from the CCP, if anything, it would be a gold or Bitcoin potential. I think that the US would want to get ahead of that, but that's a ways away and just a thought more than anything.

Again, I can always be wrong, but even if there is regulation, which I personally don't think there will be, I still think it will reach that $100,000 mark with regulation. That might change, but I think that Bitcoin is going to be very-- it's going to be the winner of 2021. I would at least recommend getting and if you don't feel comfortable with the whole cold storage and putting money on the Bitcoin exchanges specifically, just by GBTC. It's Grayscale Bitcoin Trust.

If you know anything about Bitcoin and you've heard of it, it is a more safe asset, it's on the exchanges, and it's going to have less volatility because of that [00:18:00] premium. I would steer away from-- There are probably going to be some ETFs being released soon, but I just don't see those or Bitcoin ETFs, excuse me. I don't see those as beneficial because it's going to be over cryptocurrencies in general. I don't think that although cryptocurrencies will and do have a future, I think that Bitcoin is going to be the clear winner in regards to a store of value for your money.

I'm a Bitcoin bull, not as much of a crypto bull. If the governments get involved in digital currencies, that's a different story, but we can get in that another time.

With solar being more broad and institutionalized, I think that smart systems are going to be the benefit for that. Side note really quickly. When I say things like solar will benefit smart systems, obviously, solar is going to benefit a lot of things, but the things that I'm looking that are still undervalued at this point in 2021, that's what I'm referring to in it will benefit smart systems because obviously, solar will benefit a mass amount of things but a lot of those things have already been discovered by the market and the market has shot at those valuations.

Again, when investing in 2021 and my outlook for 2021, I'm trying to suggest and elaborate on things that are still undervalued, that will benefit as well from today's investments. With solar and renewables, that's [00:20:00] what I'm referring to. Keep an eye out for companies that integrate smart systems.

There's a few different companies that I'm interested in, some in Europe. One that I really like in the smart system industry is Orion Energy Systems. Although not in Europe, let me get that tick or symbol, it's OESX or something. Yes, OESX. Orion Energy Systems. I think it has a pretty bright future out of Wisconsin. That's just one that I'm looking at.

In that same regard, institutional money, building that, I think construction will be large as well. Again I was talking about copper and construction earlier, but ACM is one that I'm looking at in that space. They are not only going to benefit from the construction boom but they actually-- Another thing that I've been looking at, this is 10 years down the line, is hyper tubes, hyper trains, pretty much Elon Musk talking about it. I think that that is going to be the future again in by 2030, but now you can invest in it and also get the benefit from added construction.

ACM is been working with companies focused on that future and so not only will they benefit from infrastructure spending, but they will also benefit, I believe in the future, from hyper loops/hyper trains/whatever you want to call it.

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[00:22:00] Something else that I would say about an industry that I think at the moment is overvalued but I do like is augmented reality. I don't think that augmented reality is going to be extremely prevalent outside of video games until we have completely self driving cars. I don't think we're going to have completely self-driving cars until 2030-ish, give or take, and at that point, I think augmented reality will boom because of the fact that augmented reality can be implemented in a car.

I think there's so much you can do with that, that drives itself so you would be able to interact with an augmented reality while going through reality. Anyways, I think that that's a really exciting industry, but I don't think where it's currently at and evaluations, especially, I don't think companies are going to especially only augmented reality companies are going to be able to grow into those evaluations before earnings make investors sell if that makes sense.

I think that the earnings that the companies will be providing aren't going to excite people because I don't think that those earnings will really turn into anything until 8 to 10 years away, 5 to 10 especially. That's an industry that I'm looking to invest in, but waiting to pull the trigger until valuations calm down. Keep that in mind, patience is definitely key here.

Again, this just goes back to the whole 2000 tech bubble. We're at that stage now where there's so much [00:24:00] valuation that people are trying to figure out what the next thing is. We're pulling something like an underdeveloped technology such as augmented reality, pulling it forward like five years in investment terms because it's a tech that will probably be beneficial, but not enough for your investment portfolio at this exact time. I think that we're reaching a bit. Just try to keep that in mind and remember that it's 2021, the technology we have around us is important, but be grounded in the reality of what technology is today.

In regards to cruises, I was bullish on them but it seems that because of regulations, they're not going to be able to start for another seven months at least. I think September is what I've been seeing for that and that's at the earliest. I do think that when cruises are allowed to operate again in full capacity, I think that it's a good industry people aren't afraid of cruises, that by any means, I know I would absolutely like to go on a cruise at some point in the future when they are around again.

I don't know if the same cruise line giants, Carnival, Royal Caribbean, all of these companies are going to still be the ones who own all the cruise ships. Do I think that they will probably? I don't think that the government is going to give them any assistance. I'm [00:26:00] waiting for a better time to buy into these, maybe a bit more news, see where the industry is at in June. Again, patience is key on cruises.

However, in regards to leisure travel and alternative accommodation, I do like Airbnb. It's just recently IPO’d, there's going to be a dip and I think there's going to be better buying opportunities or it's just going to follow the trend and become extremely overvalued. Again, I'm waiting on Airbnb. I do think that it will be the future of leisure travel, but I also think that there's other players in the industry so whether it is the dominant, I don't know. I think that there will be another one in the future that comes out publicly that is a good investment opportunity that will be the Hilton to its Four Seasons.

Again I'm staying away from EV and tech at the moment just because those values are just ridiculous. If you do want to get involved in EV or renewable energies, I'd recommend copper or silver because those are going to go up and they are overlooked. For tech, that's difficult because tech's going to be big obviously in the future, but just be safe when you invest in tech and understand this is where the value plays come in. If you want to invest in tech, don't invest in tech that is at 50 times price to book. [00:28:00] Don't invest in tech that's freaking astronomically overvalued.

One other area that I'm actually staying away from is anything China. I beg and plead that anyone else out there does the same. Please just go back and listen to the last two part one and two episodes of Five Eyes in China. They are expanding beyond their regions, bullying countries into their way of law, which is extremely adverse to basic human rights. I said this in my last two episodes, you can make money in China and I know that I can make money in China, there are good opportunities in China, so if you do not care about encampment of innocent individuals and want to support that, then go right ahead.

I refuse to invest in anything China for that basic reason. Once the CCP is no longer in power, then I will look at China as an investment opportunity. However, instead, I would invest in companies such as India and put all of your money into companies around that region that China is currently trying to bully and basically use their power to threaten. Just to a plea and caution as well.

Lastly, 3D printing I think is going to be massive. I think it's going to be the Xerox of the '70s or whatever it was. I think that 3D printing will be in every home [00:30:00] by I don't know when. Actually, I don't have a timeline on when it will be in every home but I do believe that not only is it going to be the new age vending machine, it's going to be in every single industry, in every single aspect of our lives, and it's going to be in every single house. I think it's going to be absolutely massive.

I'm looking at Desktop Metal at the moment. There's other ones out there. Desktop metals are pretty pure play but just looking at their system, they have-- I think that they're closest to that every household machine essentially. They have large partners in many different industries. I really like Desktop Metal. I think they're extremely undervalued for their future earnings.

American semiconductors I think will be large as well. I'm looking at Western Digital there, mostly because with growing tensions with China and getting them off our exchanges and just less money being put in that area, as well as a push for more homegrown tech because of cyber security, I think that American semiconductors will grow. Then on top of that, if you're looking specifically, maybe look at the Asia Pacific outside of China. Maybe get involved in an ETF for that because they're going to be outsourced into different areas.

Besides that, online education is going to be big as well. However, I'm not exactly sure how this is going to be implemented. I think that with government [00:32:00] starting to socialize the universities, I think that degrees won't be as important as they were 10 years ago or 30 years ago. Online education will step in. However, I don't know to the extent or I don't think that it is currently even close to that. Again, that's one of those five-year horizons. Be patient and suss it out.

All right. That is pretty much all I got this week for my 2021 outlook in investing. If you are interested in any specific stock suggestions, head over to toarcunited.com t-o-a-r-cunited.com. It's a platform where I post everything and you can get more specific suggestions there. I know that investing probably sucks for a lot of you guys but it's pretty important to understand and be financially responsible. Especially as an entrepreneur, there's a lot of opportunities for making money, but be safe while investing.

Other than that, next week, I will actually be diving into a traveling episode. As I mentioned earlier, I actually end up splitting these up into two episodes. I'm assuming that it is of interest to people because of COVID-19. It sucks to be locked down all the time. I do have a strong feeling that people will break out in the next year or so and travel a bit more. I absolutely recommend going abroad. Hopefully, I can get friend of mine [00:34:00] who has traveled extensively on the show for you guys and get a comical episode out there for you guys and keep it a little bit more lighthearted.

Other than that, that's all I got for you guys. Have a great rest of your week and I'll talk to you next week on Thoughts of a Random Citizen.

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