2020 was pretty much the worst for a lot of reasons. I am sitting here in December 2020 reflecting on the year… yeah, a lot of it was awful.
However, there were some positive surprises throughout the year!
1. Small Cap stocks were up
The economy came to a screeching halt. At the worst of the bear market, the S&P 500 was down 34%. The good news is, not only did big business recover, small companies did too! As I’m writing, small cap stocks are up 16% year-to-date.
Despite all of the struggles main street and small companies have faced during this pandemic, small companies are still being positively evaluated on the stock market. That means things are looking optimistic for the future!
2. It was the fastest bear market on record… but also the shortest!!
A bear market is defined as a 20% decline from record highs. Earlier this year, the market dropped FAST! It was down 34% in 33 days. No other bear market even comes close to falling that fast. All things considered, the stock market recovery happened pretty darn quick. Bet you never would have imagined that large cap stocks would be up 16% so far this year after the pandemic closed the economy!
3. Human ingenuity came through
We already have a vaccine for an illness that is brand new to our population. I don’t care how long the time felt… it was actually very fast! Early trials were very successful. Now let’s hope that it protects our most vulnerable!
4. We saw record-breaking unemployment, but it is on its way down!
Unemployment crushed rates seen back in the 2008-2009 financial crisis, which was a shock to the economy. The unemployment rate is still on the high side, but you can see the downward trajectory!
5. The housing market is CRUSHING IT
I guess the fact that everyone was locked in their houses made people realize they needed an upgrade. Home sales year-over-year were up nearly 7% in 2020. The record-low mortgage interest rates (shown in white) certainly didn’t hurt!
6. Retail sales bounced back in record time
When the financial crisis occurred in 2008, it took 40 months for retail sales to achieve the previous highs. It only took 5 months for retail to recover this time around. Not only that, but we are currently 3.7% above the pre-COVID peak from January!
Source: Bespoke Investment Group (as of 10/16//2020)
I do recognize that there has been a retail shift. Some industries like online sales, grocery, and building material were way up while others like restaurants, clothing, and gas stations were down.
7. The entrepreneurial spirit of America is thriving
Applications for new business soared by 1.6 million this year. Unfortunately, the pandemic did lead to the closure of many cherished small businesses. I wish that were not the case. However, bright, new entrepreneurs with bold ideas have lined up to fill their shoes.
I tend to lean towards economic optimism, but I honestly think that these facts could sway even the bleakest pessimist among us!
All this data reinforces the idea that investing is a long-term game. You never know how quickly tides will turn. If you thought this downturn would last a while and bailed early, you probably missed out on the fast recovery! Get invested and stay invested.
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