What a year!

2020 will go down as one for the history books.

As humans we spend much time looking back and looking ahead, but often the present is where calm, peace, and sanity emerge. Settle in to the present and the precious moments over the holidays.

From a stock market perspective -

Looking back
Early in the pandemic the sentiment was that "this time is different" since the economic contraction was the result of a virus. The catalysts are always different during corrections. However, the outcome for long term investors is the same. Every market downturn in history has ultimately led to a subsequent upturn, this time was no different, other than perhaps the speed at which both the drop and recovery occurred.

Looking ahead
While the ideal bottom for an investment opportunity in the stock market has passed, does that mean investors should just wait for it to happen again?
Over the next year, I think the economic environment in Canada, the US and internationally will be improved from 2020. My confidence in the macro-economic environment and likelihood of positive returns are high. While equities maybe vulnerable to short term corrections they are likely in a longer term bull market cycle.

The present
Strong November returns on positive vaccine news and the US elections settling are contributing factors to the presently elevated valuations in the stock market. Corrections are normal during the year, yet the odds of a positive return over a calendar year are overwhelmingly in favour of the investor. (See the chart below) Given the positive outlook for equity markets in 2021, this is not a time to sit on the sidelines, but it is a time to be calculated with investment decisions. And if the markets pull back at some point early in 2021, remember what happened earlier this year and take advantage of the investment opportunity.

Season's Greetings
Each of us bore witness to the many in Canada and around the world who struggled with health, job loss, and loneliness. However, it has also been a year of resilience, of hope, and a year when we stood together as a community to help those in need; and in the face of continued uncertainty, we will continue to stand strong and valiant.

I am humbled and thankful for the trust you have placed with me over the years and it is something that I do not take for granted. I hope for the best, but plan for alternatives.

Warmest thoughts and best wishes for a season of joy, celebration, and good health.

Happy Holidays!

Matthew Bishop
Investment Funds Advisor