We remember that 2018 was a bad stock market year. The trade wars announced by the United States and the Fed's rate hikes had depressed financial markets. In 2019, a sense of optimism returned to investors following trade negotiations between the Trump administration and the Chinese. Agreements with other countries such as Mexico and Canada reassured the financial markets. The stock market upturn was also driven by the Fed's rate cuts in the United States.
The year 2020 thus promised to be auspicious, especially since in the United States, the unemployment rate was reaching historic lows. But it was without counting on the covid-19 which upset the world. In March 2020, the markets experienced the biggest and fastest declines in modern history. Generalized lockdowns, a historic first, had frozen global economic activity and panic was great both among investors and individuals anxious to no longer be able to obtain basic goods. The speed of losses exceeded what investors experienced in 2008 or 2009. However, the March bear market only lasted 58 days, before giving way to one of the biggest stock market rallies in history.
This first wave of stock price increases was driven by optimism about vaccine development and a clear drop in the number of new cases of covid-19. Despite the second, third and fourth waves of new covid-19 cases, the markets consolidated between June and October 2020. In November, the markets had their best month since 1928 following the election of Biden and the Pfizer / Biontech vaccine announcement. At the end, financial markets rose in 2020, but the performance of the portfolios was very mixed depending on how investors dealt with the severe turbulence of the year.
Our view on the markets was positive for 2020. When the crisis of March 2020 appeared, we did not panic, and it was out of the question for us to take losses on stocks that we considered to be solid. To the contrary, throughout the year purchases were made on quality stocks, to take advantage of the opportunities that presented themselves.
We anticipate that the rebound in the financial markets will continue in 2021 but that the first part of the year will be better than the second. Although we can hope for a return to normal life during the last quarter of the year, the damage to the real economy will become more apparent during the second half of the year with the gradual end of the support measures put in place. by states and central banks. Thus, it will be necessary to be vigilant to any excess of optimism in the financial markets and to be opportunistic. Contrarian also because consensual behavior did not help investors. Investors who sold in March or April 2020 and those who did not dare to enter the markets before the rise in November 2020 only have their eyes to cry on.
This is not a recommendation but just our opinion. Please consult with your financial advisor before investing!