Connect with us

Markets

Prediction Consensus: What the Experts See Coming in 2021

Published

on

2021 predictions consensus

Can I share this graphic?
Yes. Visualizations are free to share and post in their original form across the web—even for publishers. Please link back to this page and attribute Visual Capitalist.
When do I need a license?
Licenses are required for some commercial uses, translations, or layout modifications. You can even whitelabel our visualizations. Explore your options.
Interested in this piece?
Click here to license this visualization.

2021 Predictions: What Experts See in the Year Ahead

Making predictions is a tricky business at the best of times, but especially so after a year of upheaval. Even so, that didn’t stop people from trying their hand at reading the crystal ball. If anything, the uncertainty creates a stronger temptation for us to try to forecast the year ahead.

Out of the thousands of public 2021 predictions and forecasts available, there are plenty of one-off guesses. However, things really get interesting when a desperate majority of experts begin to agree on what might happen. In some ways, these predictions from influential experts and firms have a way of becoming self-fulfilling prophesies, so it’s worth paying attention even if we’re skeptical about the assertions being made.

This year, we more than doubled the number of sources analyzed for our 2021 Predictions Consensus graphic, including outlooks from financial institutions, thought leaders, media outlets, consultancies, and more. Let’s take a closer look at seven of the most popular predictions:

ESG reaches a tipping point

It seems like only recently that the term ESG gained mainstream traction in the investment community, but in a short amount of time, the trend has blossomed into a full-blown societal shift. In 2020, investors piled a record $27.7 billion of inflows into ETFs traded in U.S. markets, and that momentum only appears to be growing.

prediction consensus esg

Fidelity, among others, noted that climate funds are delivering superior returns, which makes ESG an even easier sell to investors. Nasdaq has tapped ESG to be “one of the hottest trends” over the coming year.

China has a strong 2021

Financial institutions that issue predictions generally hedge their language quite a bit, but on this topic they were direct. The world’s most populous country has already left the pandemic behind and is back to business as usual. Of the institutions that mentioned a specific number, the median estimate for GDP growth in China was 8.4%.

prediction consensus china

A souring outlook on SPACs

Much like any hot trend, once enough people get on the bandwagon the mood begins to sour. Many experts believe that special purpose acquisition companies (SPACs) are going to enter that phase in 2021.

prediction consensus spacs

SPACs had a monster year in 2020, raising $82 billion in capital. That’s more funds in one year than in the last 10 years combined. Of course, now that these 200+ companies are flush with capital, they’ll need to find a target. Scott Galloway argues that SPACs “are going to vastly underperform over the next two to three years” since there aren’t enough good opportunities to satisfy that level of demand.

Brands must be authentic and values-driven

Over the past few years, brands have become increasingly values-driven. In their 2021 predictions, experts see this trend being pushed even further.

Millennials, which are now the largest generation in the workforce, are shaping society in their own image, and the expectation is that companies have an authentic voice and that actions align with words. This trend is augmented by the transparency that the internet and social media have enabled.

prediction consensus values-driven companies

Being a “values-driven” company can mean many things, and often involves focusing on a number of initiatives simultaneously. At the forefront is racial inequality and diversity initiatives, which were a key focus in 2020. According to McKinsey, nine out of ten employees globally believe companies should engage in diversity and inclusion initiatives. When the chorus of voices grows loud enough, eventually actions must follow.

A great rethinking of office life is underway

The great work-from-home experiment will soon be approaching the one-year mark and a lot has changed in a short amount of time.

Even firms that were incredibly resistant to remote work found themselves in a position of having to adapt to new circumstances thanks to COVID-19. Now that the feasibility of at-home work has been proven, it will be tough for companies to walk things back to pre-pandemic times. Over 2021, millions of companies will begin reengineering everything from physical offices to digital infrastructure, and this has broad implications on the economy and our culture.

prediction consensus rethinking office life

Individuals and employers start taking wellness seriously

The past year was not good for our collective mental health. In response, many companies are looking at ways to support employees from a health and wellness standpoint. One example is the trend of giving teams access to meditation apps like Headspace and Calm.

prediction consensus wellness

This focus on wellness will persist, even as people begin to return to the office. As commercial leases expire in 2021, companies will be re-evaluating their office needs, and many experts believe that wellness will factor into those decisions.

Lastly, this trend ties into the broader theme of values-driven companies. If brands profess a desire to impact society in a positive way, employees expect actions to extend inward as well.

Big Tech backlash continues

Among experts, there’s little doubt that the Big Tech backlash will bleed over into 2021. There is a divergence of opinion on exactly what will happen as a result. There are three general themes:

    1. 1. Regulators will admonish and threaten Big Tech publicly, but nothing concrete will happen.
      2. Facebook will be broken up into parts (Facebook, Instagram, and WhatsApp)
      3. Companies will proactively change their business practices and look for ways to settle quickly
  • prediction consensus tech-backlash

    Aside from the thread of regulatory action, the tech sector is facing a bit of an identity crisis. Silicon Valley is grappling with the reality that the center of gravity is shifting. Pitchbook notes that Bay Area will fall below 20% of U.S. deal count for first time, and there have been very public departures from the valley in recent months.

    Faced with pressure from a number of different angles, the technology sector may have a year of soul-searching ahead.

    The Elephant in the Room

    COVID-19 is the one factor that impacts nearly every one of these 2021 predictions, yet, there were few predictions–and certainly no consensus from experts–on vaccine rollouts and case counts. It’s possible that the complexity of the pandemic and the enormous task of dealing with this public health crisis makes it too much of a moving target to predict in specific terms.

    In general though, expert opinions on when we’ll return to a more “normal” stage again range from the summer of 2021 to the start of 2022. With the exception of China, most major economies are still grappling with outbreaks and the resulting economic fallout.

    It remains to be seen whether COVID-19 will dominate 2022’s predictions, or whether we’ll be able to look beyond the pandemic era.

    The Good Stuff: Sources We Like

    Of the hundreds of sources we looked at, here were a few that stood out as memorable and comprehensive:

    Bloomberg’s Outlook 2021
    : This article compiled over 500 predictions from Wall Street banks and investment firms.

    Kara Swisher and Scott Galloway’s Big 2021 Predictions: Swisher and Galloway combine their deep understanding of the technology ecosystem with frank (and hilarious) commentary to come up with some of the most plausible predictions of 2021. From Robinhood to Twitter, they cover a lot of ground in this interview.

    Crystal Ball 2021: Fortune’s annual batch of predictions is always one to watch. It’s comprehensive, succinct, and hits upon a wide variety of topics.

    John Battelle’s Predictions 2021: John Battelle has been publishing annual predictions for nearly two decades, and this year’s batch is perhaps the most eagerly anticipated. His predictions are thoughtful, credible, and specific. It’s also worth noting that Battelle circles back and grades his predictions – a level of accountability that is to be praised.

    Like this feature? An expanded look at 2021’s predictions will be shared with our VC+ audience later this month.

    Click for Comments

    Markets

    Beyond Big Names: The Case for Small- and Mid-Cap Stocks

    Small- and mid-cap stocks have historically outperformed large caps. What are the opportunities and risks to consider?

    Published

    on

    A line chart showing the historical return performance of small-, mid-, and large-cap stocks.

     

    Published

    on

    The following content is sponsored by New York Life Investments
    An infographic comparing low-, mid-, and large-cap stocks, including an area graph showing historical returns, a bubble chart showing how much $100 would be worth over 35 years, a horizontal bar graph showing annualized volatility, and a line graph showing relative forward price-to-earnings ratios, that together show that mid-cap stocks present a compelling investment opportunity.

    Beyond Big Names: The Case for Small- and Mid-Cap Stocks

    Over the last 35 years, small- and mid-cap stocks have outperformed large caps, making them an attractive choice for investors.

    According to data from Yahoo Finance, from February 1989 to February 2024, large-cap stocks returned +1,664% versus +2,062% for small caps and +3,176% for mid caps.  

    This graphic, sponsored by New York Life Investments, explores their return potential along with the risks to consider.

    Higher Historical Returns

    If you made a $100 investment in baskets of small-, mid-, and large-cap stocks in February 1989, what would each grouping be worth today?

    Small CapsMid CapsLarge Caps
    Starting value (February 1989)$100$100$100
    Ending value (February 2024)$2,162$3,276$1,764

    Source: Yahoo Finance (2024). Small caps, mid caps, and large caps are represented by the S&P 600, S&P 400, and S&P 500 respectively.

    Mid caps delivered the strongest performance since 1989, generating 86% more than large caps.

    This superior historical track record is likely the result of the unique position mid-cap companies find themselves in. Mid-cap firms have generally successfully navigated early stage growth and are typically well-funded relative to small caps. And yet they are more dynamic and nimble than large-cap companies, allowing them to respond quicker to the market cycle.

    Small caps also outperformed over this timeframe. They earned 23% more than large caps. 

    Higher Volatility

    However, higher historical returns of small- and mid-cap stocks came with increased risk. They both endured greater volatility than large caps. 

    Small CapsMid CapsLarge Caps
    Total Volatility18.9%17.4%14.8%

    Source: Yahoo Finance (2024). Small caps, mid caps, and large caps are represented by the S&P 600, S&P 400, and S&P 500 respectively.

    Small-cap companies are typically earlier in their life cycle and tend to have thinner financial cushions to withstand periods of loss relative to large caps. As a result, they are usually the most volatile group followed by mid caps. Large-cap companies, as more mature and established players, exhibit the most stability in their stock prices.

    Investing in small caps and mid caps requires a higher risk tolerance to withstand their price swings. For investors with longer time horizons who are capable of enduring higher risk, current market pricing strengthens the case for stocks of smaller companies.

    Attractive Valuations

    Large-cap stocks have historically high valuations, with their forward price-to-earnings ratio (P/E ratio) trading above their 10-year average, according to analysis conducted by FactSet.

    Conversely, the forward P/E ratios of small- and mid-cap stocks seem to be presenting a compelling entry point. 

    Small Caps/Large CapsMid Caps/Large Caps
    Relative Forward P/E Ratios0.710.75
    Discount29%25%

    Source: Yardeni Research (2024). Small caps, mid caps, and large caps are represented by the S&P 600, S&P 400, and S&P 500 respectively.

    Looking at both groups’ relative forward P/E ratios (small-cap P/E ratio divided by large-cap P/E ratio, and mid-cap P/E ratio divided by large-cap P/E ratio), small and mid caps are trading at their steepest discounts versus large caps since the early 2000s.

    Discovering Small- and Mid-Cap Stocks

    Growth-oriented investors looking to add equity exposure could consider incorporating small and mid caps into their portfolios.

    With superior historical returns and relatively attractive valuations, small- and mid-cap stocks present a compelling opportunity for investors capable of tolerating greater volatility.

    Visual Capitalist Logo

    Explore more insights from New York Life Investments

    Click for Comments

    You may also like

    Subscribe

    Continue Reading
    Advertisement NVIDIA Leveraged ETF

    Subscribe

    Popular