As humans, we constantly wrestle with trying to make the complex simpler in order to make it fit within a framework that we can understand and control. 2020 was a reminder that life is sometimes complex, and that… is unavoidable. To simplify what we expect on the financial front in 2021, “hope to growth” has become an important guiding concept.
Many investors are confused as to why markets are at, or nearing, all-time highs when we are still a ways away from our pre COVID economic growth levels. How can markets be thriving with so many people working from home, restaurants barely able to open and the prospect of going to a Canucks game feeling about as likely as bumping into a unicorn?
One of the answers lies in the fact that markets are forward looking and most often react based on the future not the present. Said another way, if the HOPE for the future is positive, that starts the momentum for stocks to move in a positive direction. However, HOPE is never a good investment thesis and real GROWTH must grab the baton from hope for this to continue.
We have been very encouraged by what we saw on the growth front at the tail end of 2020 and continuing into the first weeks of 2021. Manufacturing data is strong, earning growth is picking up and the leading indicators for economic growth are showing improvement around the globe.
We will continue to monitor the situation and follow our process. At this point we believe that we will continue to make progress in our battle against COVID which will fuel the continued growth we need. We will be patient and will look for opportunities along the way.
“The stock market is a device which transfers money from the impatient to the patient.”
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Please give us a call if you have any questions or comments.