December Review and 2021 Outlook
Things look very different this year as we start this holiday season. The number of COVID-19 cases continues to increase around the world and many regions have heightened restrictions while others have entered lockdowns once again. Despite this, there are reasons for hope based on significant progress toward a COVID-19 vaccine.
Here is a brief update with some of the month’s developments and related thoughts:
· The S&P 500 Index had its best U.S. election week since 1932, gaining more than 1% daily for four consecutive days (Financial Post). Democrat Joe Biden was declared president-elect by major media outlets after an intense five days of ballot counting. Despite repeated claims of voter fraud, the Trump administration formally recognized Mr. Biden as the apparent winner on November 23, allowing Mr. Biden to start building his leadership team.
· Pharmaceutical firms Pfizer, Moderna and AstraZeneca announced promising COVID-19 vaccine progress after their vaccine candidates were found to be 95%, 94.5% and 90% effective, respectively, in late-stage trials. The news gave global markets a boost as the outlook for a global economic recovery improved. The Canadian government has agreements with all three firms to reserve millions of doses of potential vaccines once approved.
· Canadian home sales fell in October for the first time since April (Financial Post). Home prices and sales had reached record highs over the summer due to record-low interest rates and increased demand for spacious suburban dwellings amid the pandemic. Recent data suggests the market is cooling as more properties become available in Canada’s largest cities.
· The global economy is forecast to shrink 4.4% in 2020 (Reuters) and expand by 5.2% in 2021 based on estimates from the International Monetary Fund as ongoing lockdowns and travel restrictions negatively affect economic output. Global debt is expected to reach a record US$277 trillion (Reuters) by the end of the year as governments continue to offer support to individuals and businesses affected by the pandemic, as reported by the Institute of International Finance.
How does this affect my investments?
The promising vaccine announcements from Pfizer and Moderna prompted a selloff of U.S. technology and other growth stocks that had soared in recent months. Some investors are now shifting their focus from stocks in firms that facilitate pandemic-related technology, like work-from-home, toward more traditional firms that may currently be undervalued, such as industrials and financial services.
Which investments will outperform as a post-pandemic world slowly becomes within reach?
The best-performing stocks and sectors can change drastically over short periods of time, making it difficult to predict the winners and losers. We have worked together to protect your portfolio and mitigate risk by broadly diversifying your investments – ensuring that all your eggs aren’t in one basket. In the chart below, a global balanced portfolio is used as an example to show how diversification helps in achieving consistent returns over time and reducing overall investment risk, giving you a smoother ride.
This information has been prepared by Jeff Greenfeld who is an Investment Advisor for HollisWealth® and does not necessarily reflect the opinion of HollisWealth. The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. The Investment Advisor can open accounts only in the provinces in which they are registered. HollisWealth® is a division of Industrial Alliance Securities Inc., a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. The information in this letter is derived from various sources, including but not limited to CI Investments, S&P Index, the Financial Post, Reuters and the Institute of International Finance. Chart information provided by Morning Star Research Inc. This material is provided for general information and is subject to change without notice. Although every effort has been made to compile this material from reliable sources; no warranty can be made as to its accuracy or completeness, and we assume no responsibility for any reliance upon it.