The last 12 months took most of us by surprise as no one was prepared for the impact a global pandemic would have on the world’s financial markets. Following an unsteady few months, things began to stabilize and investors regained their confidence. As a result, 2020 was a bumper year for the number of new investors trying different kinds of trading for the first time. All different kinds of investing saw more interest than ever before, including from those who previously hadn’t been interested.
There were several drivers that helped facilitate this evolution. These include the role of technology. Emerging tech moved quickly to meet the changing needs of traders throughout the year. This, combined with new trends and interest from different segments of the population, made for quite an exciting time.
Electron Capital Partners' flagship Electron Global Fund returned 5.1% in the first quarter of 2021, outperforming its benchmark, the MSCI World Utilities Index by 5.2%. Q1 2021 hedge fund letters, conferences and more According to a copy of the fund's first-quarter letter to investors, the average net exposure during the quarter was 43.0%. At the Read More
Growing Numbers Of Investors
Many different markets saw big increases in the number of investors investing in them. For example, the foreign exchange market saw a 300% increase in the number of new accounts during the year and a 50% month-to-month growth in trading volumes. Various stock trading platforms also noted a “dramatic increase” in trading activity over the last 12 months.
Traffic to sites giving instructions and tips on trading stocks also quadrupled across the board. Cryptocurrency trading also followed the trend and the value of coins such as Bitcoin and Ether reached significant highs. Much of this price increase was driven by an influx of investors and an increase in demand.
Increased Mobile Usage
Mobile phone and specifically smartphone usage increased dramatically during 2020. Globally, usage increased by around 70% while in Europe, the Spanish and Italians noted the biggest leap. Usage of laptops and PCs were also up between 32% and 42% globally, according to data from Statista. This trend of mobile usage drove forward increases in the use of apps, various games, and social media. It was also an integral part of the surge in investments.
As people were locked down at home for much of the year, many began to dabble in online investing, particularly in forex. Using mobiles and tablets, they looked at what are the advantages of obtaining a forex bonus and other incentives and then started trading. The convenience of hand-held trading combined with incentives and forex bonus offers to new investors helped encourage more traffic to trading platforms.
Diversification Of Portfolios
As mentioned above, many sectors experienced higher numbers of new investors and returning investors than in previous years. This was also due to investors seeking to diversify their portfolios. 2020 was a somewhat volatile market for most, including crypto, forex, commodities, and stocks. This presented traders with plenty of opportunities to profit from wildly swinging values and prices.
Investors that previously only invested in one or two particular markets or commodities, began exploring other options. Cryptocurrencies were a popular choice. As cash usage was reduced due to lockdowns and online shopping and transacting increased, so too did interest in cryptocurrency. Forex was also popular as the dollar, euro and pound had a tumultuous time.
As for 2021, we can expect to see a continuation of the trends that emerged in 2020. Mobile trading will become more sophisticated and it's likely that integration of AI, robots, and even blockchain will become more commonplace in a near future. We expect to see PC and laptop trading stopping almost completely as mobile phones far outpace the capabilities of computers. This will drive forward not only more traders and investors, but younger age groups such as 20-30-year-olds who prefer to do most things from their phones.
The cryptocurrency market will continue to thrive as many currencies become widely adopted. Crypto such as bitcoin and ether are now accepted by a growing number of eCommerce sites and you can even be paid in crypto in some countries. Forex will likely continue to register new traders but a cross-over to crypto trading is likely to become more common as consumer trust continues to grow.
If you've never considered investing in commodities as currency, stocks, or crypto, then perhaps 2021 could be the year for you. Trading has shaken off the image that it's only something that business people, experts or the older generation do. Investing is dynamic, innovative, and expected to have another thoroughly interesting 12 months.
It’s time for investors to build new narratives. Siddiqi says they might be around sectors like health technology or trends in behaviour, such as remote working or food technology. They should really include evidence of agility in the culture of a company.
In that, as in so much else, COVID-19 has turned traditional stock trading wisdom upside down. Nuggets in the dirt are nowhere to be found, while the certainties that surrounded the longest bull market in history have been overturned in weeks.