While all years go down in the history books, by definition, 2020 will do so with an exclamation point. No one could have predicted the 12 months we all just lived through. We had a pandemic, mandated economic lockdowns, massive job losses, riots, protests, and the most contentious political season in anyone’s memory, just to name some of the unpleasantness. Yet, despite all of this, US investors made money last year, or should have. It was just another peculiarity in a really peculiar year.
But how? The are a couple of expressions in the investment industry. First: “don’t fight the Fed.” This means don’t outthink yourself when the Federal Reserve is throwing money at the financial system. Just make sure you get your share. Second: “eventually, the money has to go somewhere.” It did, into a lot of ‘paper investments.’ As a result, both the broad bond and stock markets in the United States had strongly positive years. Throw in at least $3 trillion of additional fiscal stimuli from Washington, and the proverbial punch bowl was full.
It was a maddening, confounding, and profitable ride. As we have told clients and prospects, 2020 ended up being a great year for investment portfolios, but we don’t want another year just like last year.
Please enjoy our thoughts about what happened in 2020 and what could happen in 2021. Obviously, no one can look into the future with crystal clarity, but, by anticipating changes, we can capitalize on them for our clients.