2020 was a year of rolling change. At the start of January, investor sentiment was positive and 2019 had been far stronger for investment returns than originally expected. Trade talk rhetoric between the USA and China was abating and an election year loomed in the USA. Often election years are characterised by voter friendly legislation as the incumbent President attempts to generate a feel-good factor as a precursor to reelection.
2020 will not be remembered as a dull year for investment markets. As the year draws to a close let us reflect briefly on some of the stats. On six individual months, the US equity market experienced excessive volatility with an increase or drawdown in excess of 5%.
Concerns over valuations and disappointing economic data were overlooked as ‘FOMO’ gripped markets – it is becoming challenging to buy certain stocks as stretched technicals and narrowing market breadth point to another period of complacency.
1 August 2020
July has seen a continuation of the recovery in equity markets. The US equity market increased +5.64% in July and Europe declined -0.87%. Our global equity strategy again produced attractive returns, appreciating +5.52% during the month. The key to successful investing in 2020 has been avoiding those companies impacted by the current economic turmoil caused by Covid-19.
2019 was a surprisingly strong year for both equity and bond investors and a measure of complacency entered markets. This was evidenced between October 2019 and February 2020 when equity market volatility declined despite global equity markets rising by ~13.5% to new all-time highs.