Our Perspective on Industry News and Trends

David Theobald, CFA, Senior Portfolio Manager in our Asset Management division has authored a white paper examining how a diversified portfolio of high-quality short-term bonds can out-earn cash without taking unnecessary risks.

Economic activity picked up steam as more people were vaccinated and as government restrictions were lifted. It became evident that consumers worldwide were anxious to return to normal. Strange market dynamics, including supply chain bottlenecks and shortages, made more headlines as the fallout from the worldwide shutdown last year continued. Read more of this Market Update in the 2Q Quarterly Insight.
 

A picture is emerging of an economy on the verge of a robust recovery. As more are vaccinated and case counts fall, hiring is happening in earnest, and mobility and spending data show people are anxious to get out and spend money. There is a long way to go, but the snapback effect coming off the lows of 2020 could lead to record growth numbers in the coming quarters. 

How can one possibly summarize 2020? Amid a global pandemic, the deepest recession since World War II, and a contentious political environment, we witnessed the quickest bear market and fastest return to all-time highs ever. Read JIC's fourth-quarter 2020 newsletter for a look back at 2020 and hear from President Jason Jackman in his annual President's Letter. 

Back in March when stocks had fallen 35% in a matter of weeks, the near future looked bleak. With a worldwide shutdown in process and much of the economy at a standstill, it would have been hard to believe the best two-quarter gains in years were just ahead. This year is a reminder that life and markets are always unpredictable, and sometimes market behavior seems out of sync with current events.

The shocking, rapid outbreak of COVID-19 sent stocks plummeting in February and March, until they bottomed on March 23rd, down 35% from the peak. It was one of the fastest selloffs on record. But then one of the fastest rallies in history began. The S&P 500 Index gained nearly 21% in the second quarter, its best quarter in more than 20 years.

As 2019 drew to a close, investors were enjoying a fantastic year of stock-market gains, unemployment had reached record lows, and the U.S. economic expansion appeared on track to continue into 2020. As always, there was a list of concerns confronting investors (impeachment, trade wars, and elections in particular), but no one knew how trivial those concerns would soon become.

This past year was a successful one for the firm on multiple fronts. It was a tremendous year for investment results in both absolute and relative terms. While we believed our “slowing but growing” economic outlook could provide a decent backdrop for the stock market, the returns exceeded our expectations.

While the stock market posted a very modest increase for the third quarter, it’s still been a great year by historical standards, primarily due to strong performance during the first half of the year.

An up-and-down second quarter resulted in further stock-market gains, capping off the best first half for the S&P 500 Index since 1997. The market volatility that began last October continued in the first half of 2019.

Now that tax season has come and gone, most taxpayers are aware (in some cases, painfully) of the impact of the changes brought about by the Tax Cuts and Jobs Act. Each tax return has its own unique wrinkles, and few situations are the same. Still, one broad conclusion that has been made about the new law is the sharp reduction in the percentage of taxpayers who itemized deductions. 

Nearly a decade into this historic bull market run, the S&P 500 Index posted its first calendar-year loss since 2008, finishing with a total return of -4.4%. This modest decline seems far worse after the fourth-quarter selloff.