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Is This Year Over Yet?

Updated: Jul 20, 2023

This is normally a great time of year to own stocks, but let’s face it: nothing about 2020 has been normal.

(As if we needed any more reminders of that, the New York Times released it annual Year in Pictures last week. Be forewarned; I haven’t been able to get through April without tearing up.)

One big fundamental difference for investors this December is that we’re still waiting for the makeup of the Senate to be determined. Control of the Senate will be decided on January 5 with runoff elections for Georgia’s two Senate seats. Republicans currently hold a 50–48 advantage, and if the Democrats win those two seats, the vice president would cast any tiebreaking votes, effectively giving the Democrats control of the Senate. We’re still expecting Republicans to maintain control, but the makeup of the Senate will undoubtedly have significant policy implications. After generating such outsized returns since the election, we might expect investors to keep their wallets on their hips until that senatorial dust settles.

In addition to the prolonged election hangover, this fourth quarter has thrown us a few other curve balls. This month’s crazy spike in IPO’s with outlandish valuations is definitely unique. (Well, maybe they’re not that unique if you compare them to some of 1999’s deals, but who wants to do that?) This new phase of lockdowns is certainly unique. A drug product that has to be stored at minus 94°F?-- definitely on the tail end of any drug developer’s bell curve.

It was an unusual year of extraordinary challenges, and things are sure to look and feel different in 2021. 2020 has changed us, the way we do business and the way we connect, and it has rammed what’s dear to us into stark contract with that which is not.

Thankfully, one constant has been the value of personal and professional relationships, even if we’ve had to learn how to connect in new ways. Sound financial advice provided a long-term map for many investors that helped them from getting off course in a turbulent 2020. In fact, one of the most positive results of the year is that it provided an excellent backdrop for measuring the value of one's financial advisor, and that may benefit investors for decades.

We suggested here in Insights last week that we were due for a little turbulence. The CBOE Volatility Index (VIX) went on to spike more than 20%, but our expectation is for it to run even a little more. Please remain seated with your seat belt fastened until the Captain turns off the 2020 sign.

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