We hope you and your family had a safe and joyful holiday season wrapping up what was a difficult year, and we wish you a Happy 2021! We appreciate your partnership with Odyssey, and we look forward to continuing to provide peace and comfort as we care for your financial wellbeing in the year ahead.
Do you like rollercoasters? Let’s take a ride. Looking backwards let’s talk about where we are here in 2021 then we’ll review 2020 (we know you don’t want to, but you pay us to do so).
We aren’t off this ride just yet. Here we are in 2021, but our economy, markets and our country still face many challenges, including but not limited to: ongoing violent protests (most recently at our nation’s capital), distributing the vaccines quickly and safely, the sudden spread of a new coronavirus variant, adapting to the new President Biden administration, and the continued struggle of many economies around the world, including the United States.
Obstacles will continue to pop-up and it may feel like an uphill battle at times, but the collective ‘WE’ know A LOT more now than we did ten months ago. We came across this quote in the New York Times and wanted to share it with you as we hope it helps bring some perspective to current events here in the U.S. and the world. With perseverance we will get through this.
In the four months between Franklin Roosevelt’s election and his 1933 inauguration, much of the world descended into chaos. Adolf Hitler took power in Germany, and the Reichstag – the Parliament building – burned. Japan quit the League of Nations. In the U.S., hundreds of banks shut down. Lynchings surged in the south. “The country, numb and nearly broken, anxiously awaited deliverance,” as David Kennedy wrote in his Pulitzer prize winning history of the era. (source: NYT The Morning, January 8, 2021, by David Leonhardt)
2020 - up, down, and up again. The year 2020 began with the economy climbing, unemployment at record lows, and the markets achieving record-highs. Then, overnight, the world changed with the news of a coronavirus discovered in China which eventually spread throughout the world, becoming a pandemic. Everything shut down – schools, businesses, sports and even parks. Everyone suffered as a result – emotionally and financially – as the economy came to a standstill.
It is difficult to comprehend the volatility this caused to the stock markets worldwide in those few weeks as bad news unveiled itself day after day over just a few weeks. But even more shocking was the speed and height of the recovery – all of which happened within one calendar year. As we have said repeatedly, the markets are unpredictable, and 2020 wins the prize for that.
The S&P 500 index1 return was up over 31% in 2019 and continued climbing into February 2020 when Covid-19 struck. By the end of March 2020, the S&P 500 had lost -19.6% and the outlook was bleak. The word ‘unprecedented’ was used excessively throughout 2020, but what happened next was just that. Most businesses were allowed to reopen, and the economy began recovering just as significantly as it declined. After the market collapsed into bear market territory (> 20% decline from the peak) it recovered more quickly (only 6 months later) than at any other time in modern history, and the S&P 500 grew 18.4% for the year 2020. Not to be overlooked, the S&P 500 achieved 33 record highs in 2020, including the last day of the year. (Source of market returns: WSJ)
We remain committed to serving you by maximizing your financial wellbeing, and we’ll continue to do this just as we have all these years (regardless of the crisis of the moment, no matter how small or big it is). We will:
- Host regularly scheduled, meaningful conversations about your money
- Review your personalized plans to track your progress toward achieving your goals
- Avoid emotional short-term mistakes
- Manage your portfolio for long-term gains in line with your retirement planning/income needs
- Protect your retirement from the myriad of risks and pitfalls that exist
- Minimize your tax burden whenever possible (evaluating Biden tax law proposals as needed)
If you have questions or concerns between meetings, call us. We are here to help. If you have family or friends that don’t receive this level of care and service from their advisor, don’t have a financial plan or are bewildered by the investment markets, please offer an introduction. We are here to help them too.
1 The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is not possible to invest directly in an index.