2020 was a year none of us will soon forget. It started strongly, with equity markets at all-time highs and unemployment near record lows. But by mid-March, the coronavirus had reached North America after emerging overseas in late 2019. Governments around the world abruptly closed their economies and issued stay-at-home orders in an effort to slow the spread of the disease – resulting in sharp and drastic declines across major stock markets globally.
As the first wave of COVID-19 infections began to slow over the second and third quarters of the year, markets then staged an impressive recovery. This was particularly true in the U.S. where the S&P 500 Index, a broad representation of the U.S. equity market, regained all of its losses by mid-August – the fastest rebound on record.
Despite a resurgence of COVID-19 cases and renewed lockdowns in many regions, markets trended upward during the fourth quarter of 2020, boosted by growing clarity around the outcome of the U.S. presidential election and significant COVID-19 vaccine progress. With the rollout out of approved vaccines across many developed countries including in Canada, the U.S. and the U.K., the global outlook for an economic recovery is improving, although there will undoubtedly be some volatility along the way.
What lies ahead for 2021?
1. Active investing will outperform passive investing
2. Value will outperform growth
3. Mid-caps will outperform large-caps
4. Emerging markets are poised for recovery
5. Dividends will not only continue, but increase
What are the risks to a recovery?
1. Problems with the vaccine rollout
2. Geopolitical and trade tensions do not subside
3. Fiscal and/or monetary policy tightens
4. Interest rate/dollar shock
5. The U.S. political transition
6. The U.K. economy post-Brexit
The events of 2020 have shown us how unpredictable markets, and life in general, can be. I would like to wish you and your family a happy and healthy New Year. Thank you for your continued trust in me and for the opportunity to assist you in working toward your financial goals. My team and I are here to help. Should you have any questions regarding your portfolio, please do not hesitate to contact my office.
Have a great weekend,
Tracey
Sources: The information in this letter is derived from various sources, including CI Global Asset Management, Financial Post, CNBC, Wealth Professional, and Reuters as at various dates. Index information was provided by TD Newcrest and PC Bond, and all quoted equity index returns are on a total return basis (including dividends). This material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources and reasonable steps has been taken to ensure their accuracy. Market conditions may change which may impact the information contained in this document. Before acting on any of the above, please contact me for individual financial advice based on your personal circumstances. Leo Belmonte, Security Financial Services
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