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. An interesting example is a book Dow 36,000 : The New Strategy For Profiting From The Coming Rise In The Stock Market. It was written in 1999, near the peak of the dotcom bubble. It predicted that the Dow Jones Industrial Average index could quadruple to 36,000 in two-four years’ time, as the technology revolution would change how the economy operates and unleash a massive bull run in the equity market. When shortly thereafter the tech bubble burst, the book was considered one of the warning signs of market irrationality; its authors had fallen into the common error of forecasting “this time is different”. Fast forward to December 2020, and the Dow Jones index has passed 30,000 points. Another 20 per cent gain would bring us to 36,000. Put another way, what was once mocked as the hubris of tactical speculators can, when viewed through a different lens, be considered sound advice to long-term investors, had they stayed invested long enough. There’s no question that tech-bubble speculators were spectacularly misguided in their reasoning over the short-term horizon, but one could argue they were too early rather than wrong. Yet, unlike the dotcom era, the gains we see in 2020 are built on two decades of solid earnings growth supporting the stock market. The structure of the economy has also changed significantly. Technological innovation means that many ideas which were merely theoretical in the early 2000s now actually work. An idea that can’t be implemented with the available technology is on the cusp of being practical. Why big tech will remain the safest bet in a post-Covid-19 world Right now, many are worried that the technology sector is again overvalued and losses could follow. This is unquestionably valid in the short term, as the pandemic has supercharged the valuations of these companies. A gradual normalisation of our lives brought about by vaccines and better treatment could cool such interests . However, the strength of these companies is innovation. They will continue to find ways to change how we work, play and interact. With some careful stock selection, that should mean long-term investment value. A similarly long-dated theme that looks to have legs is sustainable investing , for the simple reason that policy shifts are set to change how environmental risks and opportunities are priced in. A number of Asian countries, including China , Japan and South Korea, have already announced they will reduce net carbon emissions to zero in 2050 or 2060. Given that power generation is a significant generator of carbon dioxide, boosting the share of electricity generated by solar, wind and other renewable energies will be a priority, as well as replacing internal-combustion-engine vehicles with electric ones. The sheer scale of investment and resources directed to these industries will create winners and losers. Naturally, demand for coal and other fossil fuels is expected to decline. Stricter environmental standards will surely weigh on polluting industries, such as iron and steel making, cement and transport, raising their cost of doing business and putting pressure on profitability. In addition to direct costs, these industries could find their cost of funding rising as financial institutions and investors pursue more carbon-neutral financing strategies. “Trend is your friend” sounds like a cliché but, more often than not, it pays off over the long term. Tai Hui is chief market strategist for the Asia-Pacific at JP Morgan Asset Management