Raising the Sails: Charting Your Financial Course During Turmoil

This article originally featured in the December 2020 issue of Connect.

Derek Hurst (Nagano)

With COVID, wildfires, terrorism and Kanye West getting into American politics, 2020’s been a tumultuous year to say the least. I know we’re all tired of hearing about the USA; like a Big Mac-fueled pro wrestler who just won’t leave the ring, the country has been boisterous and buffoon-like throughout the year (even more so than usual), but what happens there still affects the global economy, so we still have to pay attention.

For Japan, things are looking up. Fortunately, now that the United States election is (hopefully) finally decided and therefore behind us, investors can start charting a path forward. Make no mistake, it’s not going to be easy. Coronavirus is still very much a thing, geopolitics has in many ways seldom been as unstable, and the truth is no one really knows what the world is going to look like a month, let alone a year from now. Still, that is no reason not to keep up the good fight. International residents of Japan might even be afforded a few, unique financial opportunities that would otherwise not be available.

Japan has a few interesting things going for it in 2020 that other countries cannot claim. The first would have to be health-related: the exact reasons are hotly debated, but most will agree that Japan has—for now at least—been spared the worst of the pandemic. While countries in Europe and elsewhere are heading into further lockdowns as they grapple with worrying amounts of rising cases, Japan seems to have largely sidestepped the chaos. Regardless of the wisdom of it all, business is more or less proceeding as usual. In fact, on Nov. 11, the Nikkei ended at its highest level since 1991, driven by ballooning hopes of a recovery in the Japanese economy.

What we have in Japan is the perfect storm of effective public health measures combining with fiscal stimulus, topped off with a cherry of investor optimism. International investors looking to finally get their feet wet in the Japanese markets could pick far worse times than now to jump in. An incredible opportunity now presents itself: to invest from the safe vantage of a country that seems to have handled the pandemic responsibly. Like a general viewing the fighting from a distance, we can take a measure of the things and make informed, cogent decisions without having to deal with many of the health considerations investors in other countries are facing. In the end, that will mean we will average better returns, if we play our cards right.

Which brings us to the question: where exactly should we be putting our money? It’s a question that everyone from billionaire business tycoon Warren Buffet to financial news site TheStreet co-founder Jim Cramer have been harping on about. The consensus right now is that people should basically keep doing what they’ve been doing—keep buying into the market. Great general advice, but not super helpful in my opinion. While I’m not a professional financial planner, there are a few specific industries that I think will continue to grow and prosper in these uncertain times.

Cloud-computing and Big Data:

Think Google/Amazon/Microsoft. I know those are only three of the big four (Facebook and Apple don’t really fit into this particular category in my opinion), but these are also great companies that have posted incredible growth throughout the pandemic, and will continue to do so. Smaller, newer companies like Fastly, Palantir and Zoom are also primed for huge growth in 2021, so I would not hesitate to invest in those either. Even if an effective vaccine comes out before the end of the year, I think it is going to be awhile before things truly “get back to normal”, and in the meantime, remote work and e-commerce will continue to become ever more dominant in our society.

Fintech

Financial technology companies like Square and PayPal are not just growing exponentially right now because of COVID, but they are primed to pop over the next decade. As fiat money (government-issued currency) around the world begins to lose market share to crypto, I think we are going to see an explosion in Fintech that could be as big, if not even bigger than Web 2.0. This is definitely an industry to keep an eye on, and one which will yield huge gains if invested in now.

Green energy and EV manufacturing

This may end up being the biggest one of all. Companies like Tesla and Nio are collectively up almost three-thousand percent since January and may be dominating the headlines right now, but there are a slew of smaller companies like Plug Power and Workhorse that are positioning themselves as disruptors in the energy sector. Robust competition in green energy is going to be good for everyone (aside from the oil companies, that is). Make no mistake: renewables are the future of energy, and companies that provide the infrastructure are going to be household names very soon.

The pandemic has in many ways sped up an economic process that would have otherwise taken years to come about. The writing is on the wall: the world has changed, and today’s tech companies are the new blue-chips. Even Japan is getting rid of hanko stamps. Those who fail to get on the wagon now will face huge entry barriers down the road, and will most likely be left in the dust. So, take the advice of the elder statesmen like Buffett, by all means, but also look just a smidge past the horizon to what is coming down the pike. Keep investing, keep safe, and whatever you do—keep looking forward.