Hope you all had a great holiday season! 2020 was a hard year in a lot of ways but this is really the first Christmas break that I can remember that it felt peaceful. I am extremely blessed to have all my immediate family close by. So many advantages to having grandparents, aunts, uncles and cousins all willing and available to help and share raising a family with, but Christmas season is not one of them. Along with the usual holiday festivities our family also typically squeezes in four birthdays and a couple of anniversary celebrations. My usual Christmas season consists of alternating between traveling to family celebrations and repeated cleaning of our home for whatever event we are hosting – it is exhausting! This year we were adding a wedding into the mix and I was kind of dreading the craziness of it all. But COVID changed all that. Wedding was very small. It was a quiet, meaningful, and emotional day. The snow made the day magical and the intimacy of such a small gathering almost made it more impactful for me personally. Christmas season was just our family together with no real agenda or set plans. Lots of time spent sharing meals, playing games and just being together. It was special, I will remember the peacefulness fondly and it is something I hope to be able to replicate, at least partially, when we return to normal.
New Years is a weird time for me. It feels like a fresh start, new beginnings, and a time for change and yet really it is just one more day turned over in the calendar. Weather was crappy December 31, still terrible through first week in January. Started back up coaching soccer again this week, I am still looking at the same punk 16-year-old boys I ended the year with 3 weeks ago! COVID deaths just hit a record high this week and yet 2020 was the year of the virus and 2021 is being heralded as the year of the vaccine. Nothing may materially change but psychologically it is massively significant. Something about the year turning over forces us into a state of introspection. We tend to look at things like our health, habits and finance and reflect on whether we are satisfied with where we are at. 2020 was rough on us on a lot of fronts! I went from playing and coaching soccer to watching soccer and my waistline did not appreciate the change. I somehow let my Blinkist subscription lapse (audio book summaries of top business and self-improvement books that I would typically listen to in the car, makes you appear smart and well-read without having to read the whole book – its brilliant!) but joined a Whiskey of the month club (equally brilliant but for altogether different reasons!). I saved money on vacations, gas and eating out, but my discretionary spending went through the roof as we bought new household furniture, loungewear and made our local skip the dishes drivers very happy!
Self awareness is necessary for change. If you don’t know where you are, it is really hard to move forward. The litany of broken New Year’s resolutions will attest to the fact that self awareness alone is not enough, but it is a necessary step towards putting a plan of action into place. Financially 2020 was an unbelievably volatile year that rewarded investors despite the economy getting crushed by COVID. The pandemic disrupted our lives and wreaked havoc on the global economy in ways that were previously unimaginable and yet the broad based indexes managed to finish positive. The DOW ended up 7%, the MSCI up 5% and the TSX finished up 2% for the year. These modest numbers mask the incredible volatility and potential that 2020 offered though. IT, Clean Energy and healthcare soared as billions of dollars flowed into accelerating long term secular changes in ecommerce, virtual work and telehealth. The effect on society was decidedly uneven with clear winners and losers and lots of surprises. Elon Musk just surpassed Jeff Bezos as the richest man in the world as Tesla soared 800% in 2020. Almost any investment in IT brough handsome reward as Nasdaq was up 40% for the year. Canadian markets lagged as energy, financials and material sectors were the worst performing sectors (three of Canada’s biggest industries). But even the lagging sectors offered tremendous opportunity for investors as pretty much anything bought in April or May bounced and offered a significant return. In general, right across my book of business , this year was one of the best performing years for my clients that I have ever experienced. If 2020 taught us anything it was the importance of being disciplined, intentional and adaptable in our investment process.
2021 offers more hope and optimism than I have seen in a couple of years. The resiliency of the markets was tested and proven last year. Fiscal stimulus continues to be pumped into the global economy, totaling more than 10% of GDP on average (Canada is actually at 16%). Interest rates will stay low for the foreseeable future and continue to pump liquidity into markets with their quantitative easing programs. Global vaccination campaigns will start to take effect soon and hopes are high that the economy continues to reopen, and we move through recovery and into the expansionary phase of the economic cycle. Technology driven change will continue to drive secular trends and artificial intelligence, genomics and smart energy technologies are areas that I think are going to drive returns over the next decade. I also think that the low interest rate environment will put a premium on quality dividend paying stocks as income investors search for yield. Lots of opportunities for growth in today’s markets.
I continue to believe that pandemic driven unpredictability will bring a healthy dose of volatility and yesterday’s Capital building insurrection/protest shows the US has a lot of work to do to try and heal the brokenness in that country. There are certainly challenges ahead of us. It is all well and good to put a plan in place that accounts for growth and expansion, but there must be safeguards in place as well. “No battleplan survives first contact with the enemy” or in the more modern version of that saying, “everyone has a plan until they get punched in the mouth” (highly recommend Blinkist!). An optimistic outlook still needs to be balanced with caution.
My 2020 fitness “regime” definitely needs overhauling this year. I thought I was doing well when I replaced cream in my coffee with skim milk and sacrificed my afternoon sugar craving by switching to a dark chocolate treat instead of milk chocolate, but the scale doesn’t lie! I downloaded a calorie counter this week and have realized I need to make substantial more changes to my diet as I am consistently hitting my daily caloric limit by lunchtime! The good news for you is that my financial planning skills are much better than my personal training skills. Positive returns and record growth in one of the most challenging years we have ever experienced mean that the disciplined, balanced approach to investing we have is working. Happy to have 2020 behind us and looking forward to continuing to work with you all this year!
Stay positive, stay safe, stay disciplined!
Jeremy
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