Market View

Quarter 4, 2020

What Worked in 2020What Didn't in 2020
Materials StocksEnergy Stocks
Technology StocksValue Stocks
US Growth StocksTelecom Stocks
Equity MarketsFourth Quarter % Change (in Cdn$)Calendar Year 2020 % Change (in Cdn$)
S&P/TSX Composite9.0%5.6%
S&P 5007.0%18.3%
MSCI/EAFE10.7%6.4%
MSCI/EM14.2%16.6%
TSX Energy14.7%-26.6%
TSX Financials16.7%1.6%
Bond MarketsFourth Quarter % Change (in Cdn$)Calendar Year 2020 % Change (in Cdn$)
FTSE Canada Universe Bond Index0.6%8.7%

December 2020  

Well, another year has passed. And what a year it was!

We have talked about forecasting in the past and 2020 is a great year to analyze for its surprises.

The Covid-19 issue was known by the end of 2019 but very few realized the impact it would have. We do not remember reading in late 2019 that within 6 months, almost everyone would be wearing masks in public. In fact, had we heard someone in 2019 say that 2020 would be the year of the mask, we would have looked at them twice.

Now that we are in 2021, economic, market and investment strategists gaze into their crystal balls and attempt to predict the future. We have read far and wide to see what forecaster got the 2020 market return trajectory correct and we have not found anyone yet. A serious market plunge as economists predicted the Great Depression in March 2020 was followed by a phenomenal market recovery as the year progressed. Not only did we not read about last year’s market moves in late 2019, we didn’t read about 2020’s market recovery last March after the market fell dramatically. The battle cry at that time was that markets should be closed.

Once again, when it comes to forecasts and predictions (especially those about the future), the right answer is that nobody really knows. And 2020 is a great example of that.

The real lesson for investors is to stay invested in good times and not so good times. It’s tough to predict where the market will go. What is helpful is to review our financial plans and ensure that they can weather the tough times that do come. The year 2020 was certainly one of those challenging times.

Given the track record of forecasters in 2019 trying to predict 2020, we will refrain from making any large-scale forecasts and will focus on selecting stocks and bonds with a margin of safety and focussing on asset allocation. Boring stuff for sure. But that’s what successful investing is all about. When we look at our portfolios, we believe that post-vaccine, they are in a good position to benefit from a more normalized environment going forward. 

Please feel free to reach out to us if you have any questions.

We wish all of you a healthy and prosperous 2021!

Fixed Income  December 2020  December 2019
Cdn 91 day T-Bills 0.12% 1.67%
U.S. 91 day T-Bills 0.10% 1.52%
Cdn 10 year Bond 0.70% 1.64%
U.S. 10 year Bond 0.93% 1.92%
Commodities (in U.S.$)  December 2020  December 2019
Oil 48.52 61.06
Natural Gas 2.54 2.19
Gold 1895.10 1523.10
Currency  December 2020 December 2019
Cdn/USD 1.2719 1.3018
Cdn/Eur 1.5553  1.4566