Stock Market Outlook 2021 Buckle Up stock market articles 2021 Morgan Stanley
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Stock Market Outlook 2021 Buckle Up stock market articles 2021 Morgan Stanley
1  Goldman Sachs, December 3, 2020. The index performance is provided for illustrative purposes only and is not meant to depict the performance of a specific investment.  Past performance is no guarantee of future results.  See Disclosure section for index definitions. From our startup lab to our cutting-edge research, we broaden access to capital for diverse entrepreneurs and spotlight their success. At Morgan Stanley, we lead with exceptional ideas. Across all our businesses, we offer keen insight on today's most critical issues. We offer scalable investment products, foster innovative solutions and provide actionable insights across sustainability issues. Five key areas of the bond market could offer opportunities for investors seeking higher yields and portfolio diversification. At Morgan Stanley, giving back is a core value—a central part of our culture globally. 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Learn from our industry leaders about how to manage your wealth and help meet your personal financial goals. My conclusion for 2021? It could be an overall good year for equities, but buckle up. That would be consistent with the second year of a bull market. This material is a general communication, which is not impartial and has been prepared solely for informational and educational purposes and does not constitute an offer or a recommendation to buy or sell any particular security or to adopt any specific investment strategy. All investments involve risks, including the possible loss of principal. The information herein has not been based on a consideration of any individual investor circumstances and is not investment advice, nor should it be construed in any way as tax, accounting, legal or regulatory advice. To that end, investors should seek independent legal and financial advice, including advice as to tax consequences, before making any investment decision. 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Now in 2021, amid hope and excitement that the pandemic might soon be behind us as vaccines are distributed, investors may actually find it tougher to generate the kind of stock market returns we saw last year in the midst of COVID-19. Strange I know, but as we saw last year, equity returns need not align with what is the current state of the economy. Instead, stocks this year may resemble their performance in 2010, i.e., year two of the bull market that started in 2009. After the S&P 500 Index’s stunning 68% return from the March 2020 low to the end of the year, stocks likely need to take a breather, much as they did in the second quarter of 2010. Importantly, however, overall returns of a second year of a bull market are historically positive, like in 2010. Ireland: MSIM Fund Management Limited. Registered Office: The Observatory, 7-11 Sir John Rogerson's Quay, Dublin 2, D02 VC42, Ireland. Registered in Ireland as a private company limited by shares under company number 616661. 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Our firm's commitment to sustainability informs our operations, governance, risk management, diversity efforts, philanthropy and research. From volatility and geopolitics to economic trends and investment outlooks, stay informed on the key developments shaping today's markets. At Morgan Stanley, we lead with exceptional ideas. Across all our businesses, we offer keen insight on today's most critical issues. A career at Morgan Stanley means belonging to an ideas-driven culture that embraces new perspectives to solve complex problems. See how you can make meaningful contributions as a student or recent graduate at Morgan Stanley. Stock market returns in 2020 eerily resembled the trend in 2009—that is, the strength of the first year emerging from a deep stock market recession. While past performance does not necessarily predict future results, being an active equity investor does require understanding historical moves. 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Would you like to help us improve our coverage of topics that might interest you? Tell us about yourself. Outside of the U.S., we’re particularly focused on Asia ex-Japan technology stocks. stock market articles 2021 This group historically benefits from U.S. dollar depreciation, and technology stocks in this part of the world are trading at significantly lower valuations than their U.S. peers. Negotiations on a number of government policy points such as taxes, fiscal spending and deficits have hit a fever pitch. Here are three potential outcomes through year-end. 3  Value stocks refer to companies whose share prices may be considered undervalued relative to revenue and profit margins Japan: For professional investors, this document is circulated or distributed for informational purposes only. 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This will likely shake out the reluctant bulls, those who only recently put their cash to work in equities, at the exact wrong time. Based on history, investors should hold tight and keep eyes on the longer term. The second year of a new bull market historically performs quite well overall, though it tends to be more gut-wrenching along the way. From our origins as a small Wall Street partnership to becoming a global firm of more than 60,000 employees today, Morgan Stanley has been committed to clients and communities for 85 years. We believe our greatest asset is our people. We value our commitment to diverse perspectives and a culture of inclusion across the firm. Discover who we are and the right opportunity for you. We offer timely, integrated analysis of companies, sectors, markets and economies, helping clients with their most critical decisions. Morgan Stanley Distribution, Inc. serves as the distributor for Morgan Stanley Funds. On the surface, following the strong returns of 2020, stocks may appear expensive, deterring investors. The S&P 500’s current price-to-earnings ratio is high relative to its historical value. Over the past 44 years, such a high price multiple has never been sustained, apart from the tech bubble of the 1990s. However, comparing the earnings yield to the US 10-year Treasury shows that the market is actually on the cheaper side of the equation. 1 Companies that were impacted the most by the effects of the pandemic-induced recession, whose valuations are at lows relative to their history, i.e. value stocks 3 —for example, banks, movie theaters and cruise lines—may present a compelling opportunity particularly in an economy where the consumer is strong. Historically, the best time to own value stocks has been when the economy is exiting a recession. 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We help people, businesses and institutions build, preserve and manage wealth so they can pursue their financial goals. Morgan Stanley helps people, institutions and governments raise, manage and distribute the capital they need to achieve their goals. Last year, as the market recovered from its drop in March, many investors were way too bearish in retrospect, keeping too much cash on the sidelines. Once the rally began, volatility dropped, and the bull market climbed significantly before the bears eventually capitulated late in the year. 2  Factset. High growth as defined by the valuation differential in terms of standard deviation between the highest growth decile of the Russell 1000 based on low beta, high growth, high volatility, and high momentum versus that of the market median. Please consider the investment objectives, risks, charges and expenses of the funds carefully before investing. The prospectuses contain this and other information about the funds. 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Sign up to get Morgan Stanley Ideas delivered to your inbox. This document may be translated into other languages. Where such a translation is made this English version remains definitive. If there are any discrepancies between the English version and any version of this document in another language, the English version shall prevail. Morgan Stanley Investment Management is the asset management division of Morgan Stanley. Looking further, the 50 fastest growing U.S. companies are behaving similarly to those that drove the tech bubble to its peak in 2000, with valuations as stretched as they were back then. 2 However, if you broaden the set to include the 100 fastest growing U.S. companies, valuations are not so extreme; in fact, they came down as a group late last year, thus providing potential opportunity for investors. Since our founding in 1935, Morgan Stanley has consistently delivered first-class business in a first-class way. Underpinning all that we do are five core values. Risk Considerations There is no assurance that a portfolio will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that the market values of securities owned by the portfolio will decline and may therefore be less than what you paid for them. Market values can change daily due to economic and other events that affect markets, countries, companies or governments. It is difficult to predict the timing, duration, and potential adverse effects of events. Accordingly, you can lose money investing in this portfolio. Please be aware that this portfolio may be subject to certain additional risks. In general,  equities securities’  values also fluctuate in response to activities specific to a company. Stocks of  small-and medium-capitalization  companies entail special risks, such as limited product lines, markets and financial resources, and greater market volatility than securities of larger, more established companies. Investments in  foreign markets entail special risks such as currency, political, economic, market and liquidity risks.  Illiquid securities may be more difficult to sell and value than publicly traded securities .  Non-diversified portfolios  often invest in a more limited number of issuers. As such, changes in the financial condition or market value of a single issuer may cause greater volatility. Morgan Stanley helps people, institutions and governments raise, manage and distribute the capital they need to achieve their goals. A separately managed account may not be appropriate for all investors. Separate accounts managed according to the Strategy include a number of securities and will not necessarily track the performance of any index. Please consider the investment objectives, risks and fees of the Strategy carefully before investing. A minimum asset level is required. For important information about the investment manager, please refer to Form ADV Part 2. Morgan Stanley helps people, institutions and governments raise, manage and distribute the capital they need to achieve their goals. Multicultural and women entrepreneurs are the cutting-edge leaders of businesses that power markets. Hear their stories and learn about how they are redefining the terms of success. 4  Source: Bloomberg, Factset. 1990 through 2020. Value spread as defined by the valuation differential between the cheapest decile of the Russell 1000 versus that of the market average. Valuation is based upon price-to-book, price-to-earnings, and price-to-free cash in terms of standard deviation. In sum, we see both compelling opportunities in the stock market and the potential for a solid year of returns, as would be consistent with the second year of a bull market in equities, but we do expect significantly more volatility along the way. stock market articles 2019