2020: The Year in View & 2021: The Year to Come

2020 started like almost all other years---with the excitement for a new decade, enthusiasm, anticipation and loads of goals to hit. While we all went about our business, trying to execute those new year's resolutions; on January 5th, the World Health Organization (WHO) published the first news story on a new virus outbreak. On January 23rd Wuhan, China went under quarantine and on the 31st of January, WHO declared a Global Health Emergency. Amidst this news, the S&P 500 was stable, with small daily losses and gains while US unemployment numbers remained stable at 3.5%. There were only warnings of a "pneumonia" spreading around Wuhan, China. It wasn't yet a cause of global concern. The year still had much promise.

February began with air travel restrictions and as the month progressed the US and several other countries declared the "virus" a Public Health Emergency. The stock market started its nosedive by the end of the month, falling by 8.4%. But while this was happening, February marked one of the lowest unemployment levels ever seen in US history.

Then March came with the screamer

Coronavirus (COVID-19) was classified as a pandemic. The stock market bottomed out---the worst single-day drop since 1987. If you had invested $1,000 in the S&P 500 stock market index at the close of market on the first trading day of 2020, 2nd of January, by the 23rd of March, that money would have been worth less than $700. And to make matters worse, unemployment rose to 4.4%.

Countries began implementing lockdowns, and before we knew it, the world ground to a halt. As the world came to a stop, the naira started tumbling, and Bitcoin prices fell as low as $4,800. Try not to imagine how much you would have today if you had bought 1 Bitcoin back in March.

April saw the stock market and unemployment numbers playing a game of seesaw. As the stock market fell, US unemployment numbers rose. With US unemployment rising to a whopping 14.7%, numbers so high that they rivalled great depression levels. The first batch of stimulus cheques came for Americans earning below $99,000, and companies were bailed out. In April, the cost of $1 rose to ?400.

Recovery?

After the volatile months of March and April, the question on everyone’s mind was what kind of recovery was the world in for. Was it a “V” shaped recovery, an “L” shaped recovery, or a “Nike-Swoosh” shaped recovery?

"It’s going to disappear. One day -- it’s like a miracle -- it will disappear" — President Trump, February 2020

Relative to the months of March and April, the stock market was recovering, but compared to where we were at the start of 2020, the S&P 500 was down over 5%. US unemployment was at 13.3%, better than April but still aloft. Aside from US unemployment and the stock market, there was another cause for concern---COVID related deaths. On May 28th, total COVID related deaths in the US passed 100,000. By the end of May, it cost over ?450 to get $1.

Summer

June marked one of the first months of a summer like no other. Global COVID cases hit 10 million with the US accounting for over 2 million of the total. No trips to Disney World or the Bahamas. Vacations were spent remodelling homes and turning spare bedrooms into home offices. Never in human history have people adopted new methods of working so quickly. Working from home went from being a rare benefit employers would offer to becoming essential to keeping organisations running.

While unemployment was still high and the stock market was still down, relative to the previous 3 months, June's 11.1% unemployment rate and the S&P 500 being down 3.8% year-to-date was an improvement.

Re-opening Reversed. Was the Stock Market Overvalued?

As more states started reopening, unemployment rate fell to 10.2% in July. As cases began to rise in states that were the first to reopen, they quickly reversed course and halted plans to reopen non-essential businesses.

By the end of July, the S&P 500 reached a higher level than at the beginning of the year, showing that government intervention with money printing and near-zero interest rates caused a level of inflation in asset prices. Even though corporate profits had fallen dramatically, many of these firms' stock prices were back to pre-pandemic levels, causing many to wonder if stock prices had become too overvalued.

It didn't help matters that between June and July, the price of 1 unit of Tesla stock had risen by 50% and news of its possible addition to the S&P 500 started flying around.

US Unemployment down a notch

In August, US unemployment saw one of its biggest drops between July and August, going from 10.2% to 8.4%. Gold hit $2,000. Within days of each other, Apple had a 4-for-1 stock split and Tesla had a 5-for-1 stock split. The US Presidential election was 3 months away, and the awful taste of how the pandemic had affected Americans' lives was fresh on the buds.

Vaccines: A glimmer of hope?

Pfizer & BioNTech vaccines reached phase 3 trials, which raised hopes that a vaccine might be out by the first quarter of 2021. US unemployment continued trending lower as a rate of 7.9% was recorded in September as more employers brought back workers with the realisation that many jobs could be done remotely. Tesla was not added to the S&P 500, so the stock price took a mild blow.

The Rona went trick or treating in the White House

As the U.S. was preparing for an election, the following month news from the White House caused a stir among headlines as it announced that the President and the First Lady tested positive for COVID-19. With both presidential candidates well into their 70s, the question was raised about what might happen if the president, whether Trump or Biden, became seriously ill from the disease. The news seemed to have a minimal medium-term impact on markets as the S&P 500 ended the month down just 2.7%. Unemployment rate still went down to 6.9%. Though we did not know it yet, Bitcoin began its ascent that would end up in a value almost 3 times its value in 3 months.

Biden Won - Marijuana Stocks Soar

The election of 2020 was like no other, as election “day” had very little meaning given the extended process that would need to take place to count the great number of mail-in ballots. Nonetheless, just a few days after Americans went to the polls Joe Biden was elected the next president of the United States. The presidential news and news from Pfizer & BioNTech about the effectiveness of their vaccine caused markets to end the month up 10.2% from the month before. With Marijuana stocks rising as high as 180% in just 3 days after Joe Biden became the likely winner. By the end of November, it cost as high as ?500 to get $1.

IPOs, Vaccines! and Bye-bye COVID or is it?

December 2020 was one of the busiest year-ends for initial public offerings (IPOs) in US history with Airbnb, DoorDash and other companies went public.

With news on the effectiveness of two different vaccines spreading throughout the world, a light at the end of the tunnel started to appear. Unemployment reached its lowest level since February, and the first dose of Pfizer’s approved vaccine given to a woman in Britain was widely publicised to show the world that a vaccine was soon on its way. The question has now become how best to distribute the newly approved vaccines and show the vaccine's safety to the numerous people scared to take it.

While this is happening, a new strain of COVID has been discovered in the UK. Could this be the start of COVID-20? Would the vaccines be effective on this new strain? Only time would tell.

To end the year, Tesla hit its all-time high of over $700 or pre-stock split price of around $3,500 and Bitcoin hit $29,000

Looking Forward

The year 2020 will undoubtedly go down as one of the most eventful years in all of human history. From a global pandemic and a U.S. election to the anxieties of a possible no-deal Brexit, it is hard to think of any single year that has brought so much uncertainty on such a global scale. 

Millions of people entered the year 2020 with the hopes of it being a “year of clarity” with the biggest things on people’s minds consisting of an election and a Japanese-hosted Olympics. This hope of “clarity” though would in a few months, seem somewhat laughable. 

These events each had lasting impact on the world and society. While the havoc brought on by the pandemic has in many ways been a tragedy, it has pushed many people and organisations to adopt new technologies and bring their attention to the quite possibly larger disaster of climate change. 

2020 was one of pure uncertainty, but the years following will assuredly be ones of learning.

Final Thoughts

The other night, it occurred to me that between Twitter and LinkedIn, I have access to an audience of over 25,000 people who subscribed/followed for (and maybe are interested in) my Finance related content and that’s...

Definitely not how I saw 2020 going

If you’d like to follow me on Twitter, here’s a link to my account. Click here. I share some of my fleeting thoughts on Personal Finance and Investment that aren’t fully formed articles so you can get in on that. Just to set expectations, I must confess that I do not only tweet about Finance related matters. I also tweet about other issues I care about, and I share jokes from time to time. Here’s the link to my Twitter again if you’re interested here or @JE_dna

2020 has been a year of immense growth for all of us. We've been forced to learn, grow and change so much in such little time. Thank you so much for sharing your time with me by reading my articles, sharing and commenting on them. I appreciate you. Thank you to the LinkedIn team for giving me the platform to share and for the great honour of being recognised as a Top Voice on the platform in Finance and the Economy. I am also grateful to my first collaborator on this newsletter William Douthat. Let's do it again, bigger and better in 2021.

This article was written by William Douthat & Oghenerukevwe Odjugo