Why tech stocks and sustainable investing are good long-term bets

Over a long horizon, a contrarian investment strategy does not pay off. Instead, it is preferable to bet on trends that look set to stay, such as innovation in the technology sector and policy shifts that support carbon-neutral goals

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Maintenance workers drive between solar panels and wind turbines in Dongtai, Jiangsu province, China, on October 14. China’s pledge to be carbon neutral by 2060 means that boosting renewable energy use will be a priority. Photo: EPA-EFE

Published: 3:45pm, 18 Dec 2020Updated: 3:57pm, 18 Dec 2020

When I recently shared my work experience with a group of bright young analysts, one question was: “Should investors be contrarian?”

Contrarian investors tend to do the opposite of the prevailing market sentiment, like buying with confidence when everyone else is selling in panic.

For day traders looking to make quick profits, sometimes it makes sense to be contrarian. If everyone is buying into one hot stock, running up the price, there will be fewer potential investors going forward in the market to push up prices even further. The same is true when investors are very pessimistic.

However, making money on short-term, tactical bets is incredibly difficult and requires a lot of analysis, research and insights.

For most people, especially those who don’t intend or particularly want to spend every waking moment in front of a flashing screen, it makes more sense to think long term and align investment goals with long-term objectives in life. From this perspective, timing the market through contrarian swimming against the tide suddenly doesn’t look so clever.

A man walks past an electronic board showing the Hong Kong stock index on June 30. Photo: AP

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