These were the top 3 investment lessons of 2020, according to the world's largest asset manager

Lucas Jackson/Reuters

  • With 2020 in the books, BlackRock is taking a look at the top three investment lessons of the year, according to a note on Monday.
  • These lessons will shape the outlook for 2021 as the economy continues to recover from the COVID-19 pandemic, according to BlackRock.
  • Detailed below are the top three investment lessons of 2020, according to BlackRock.
  • Visit Business Insider’s homepage for more stories.

2020 was a volatile year in the stock market as investors grappled with a COVID-19 pandemic and the sharpest economic decline since the Great Depression.

According to BlackRock, which manages more than $7 trillion in assets, investors can takeaway three big lessons from 2020 that can help inform the outlook for 2021.

Detailed below are the top three investment lessons of 2020, according to a Monday note from BlackRock.

1. “The nature of the Covid shock and the policy revolution triggered by the pandemic were core to the performance of risk assets and our overall asset views.”

BlackRock sees the ongoing monetary and fiscal support from the Fed and Congress as a “policy revolution” that serves as a major underpinning for the outlook of 2021. The ongoing policy support in 2021 will help prevent long-term economic scarring as Covid vaccines help hasten an economic recovery.

Read more: GOLDMAN SACHS: Buy these 37 stocks that could earn you the strongest returns without taking on big risks in 2021 as the recovery and vaccine distribution get underway

2. “The importance of long-term structural trends as drivers of asset performance.”

The pandemic helped reinforce an increased focus on the dominance of e-commerce at the expense of brick and mortar retail, helping technology-focused companies with long-term structural tailwinds to continue to outperform, according to BlackRock. 

“This helps inform our barbell approach to risk assets over the next six to 12 months: quality assets such as tech and healthcare stocks on one end, and selected cyclical exposures on the other,” BlackRock said, adding that structural challenges in traditional value sectors could have limited upside even with a rapid recovery in the economy.

3. ” It is important to be selective in cyclical exposures.”

With a looming reopening of the economy, investors should have some exposure to cyclical stocks that will benefit, but structural headwinds in some areas require selective exposure. 

The bottom line from BlackRock is that a key takeaway from 2020 is “how swiftly macro policies can evolve and the lasting impact this can have on market dynamics,” according to the note.

“The policy revolution that started in 2020 is still a key driver on our investment views for this year,” BlackRock concluded.

Read more: A crypto CEO breaks down why he would not be surprised to see Bitcoin and Ethereum rise at least 100% in 2021 – and says the current sell-offs are a ‘very natural and healthy thing’

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