- 2020 brought a brief bear market and a sharp “V” recovery
- Quick vaccine development and supportive fiscal and monetary policy carried the stock and bond markets to positive returns
- Our view was that 2021 would also be an up year although less so than 2020
The global onset of Covid -19 in 2020 brought great economic challenges to the world. Developed nations benefited first from the vaccines. Simultaneously, the U.S. Government provided broad fiscal (the White House and Congress) and monetary support (from the Federal Reserve Bank). These stabilized the economic situation and allowed for a quick economic recovery.
Given the global nature of the pandemic, we were reminded just how globally connected we are. This was a theme we explored in some depth, particularly as it relates to digital connectedness with 5G, the Internet Of Things etc. We examined the thought process behind one holding – Louis Vitton as we anticipated the luxury consumer would stay strong. Again, it is a company with global reach reinforcing the topic of global connectedness.
We concluded with the outlook that 2021 would prove to be a rebuilding year. Despite all the monetary support, we anticipated there was still enough slack in demand to allow interest rates to remain range bound through the year. With the Covid recovery tailwinds and all the pent-up demand for both goods and services, we expected the stock market to have another positive year.