Years in Review
Here we are, just closing out 2020, and this was a year we’ll never forget. We started out the year with a bang, as the S&P 500 hit a new record high of 3257 the first day the market was open (please refer to top chart on the following page). More records came over the next few weeks, and on 19 February the S&P 500 had its “13th” new high of the year, closing at 3386. I’m not superstitious, but then it happened. Coronavirus hit and our lives changed. Suddenly the markets sold off culminating in the quickest fall ever. Over the next five weeks, the S&P 500 dropped 34% closing at 2237 on 23 March. This was historic, as it averaged just over a 1% loss each trading day. In the throes of despair, the markets then reversed, starting the quickest rebound ever. We kept fighting back, and on 18 August, six months after the sell off started, we made a new S&P 500 record high of 3389. As 2020 closed out, we did have good news with the COVID vaccine becoming a reality. That said, on the final trading day of 2020 the S&P 500 set another new record at 3756, something I would never have expected on 23 March. Finally, I’d like to compare the 2020 market to 2019. From a volatility perspective, the S&P 500 had 110 out of 253 trading days of closing up or down 1%, while in 2019 there were only 38 days. Next, let’s compare 2020 to previous bear markets (lower chart on next page) to further emphasis the magnitude of this year’s market movement. If you compare the blue lines of the two, they look very similar. However, the bottom chart covers the 2008 bear market and seven plus years of financial fallout. As mentioned above, the top chart war for only this year. Putting it another way, we “compressed” seven years of movement into 2020, so it is no wonder we are a little exhausted as we finish out 2020.
2020 Year in Review - The “COVID Compression” Year