The Positive of 2020

Blog post #473

Despite the terrible pandemic and all the difficulties that it has caused this year, the financial markets appear to be finishing 2020 in a very positive manner.

Nearly all US and International asset classes have good returns for the year, some with very healthy gains that are far above their asset class’ historical annual average rate of return.

The 4th quarter (as of this writing, on 12/16/2020) may be one of the best quarters ever for many asset classes, even for asset classes that were underperforming earlier in the year. The fourth quarter of 2020 has produced significant gains across the board, and particularly for small and value stocks, both in the US and Internationally. International and Emerging Markets have outperformed US Large stocks in the last few months.

Thus, despite the hardships that many are experiencing due to the pandemic, diversified stock investors have been rewarded in 2020, on top of very significant gains in 2019.

We want to emphasize a few points:

  • This reinforces the importance of sticking with your stock asset allocation plan, regardless of what is going on in the world or your concerns (as valid as they may be).
  • By sticking with your investments over a long period of time, you are additionally rewarded by the effects of compounding. As your portfolio increases, additional gains added to them have an even greater effect. This is how wealth and assets can build over long periods of time.

As I was contemplating what to write this week, I read about the incredible charitable giving of more than $4 billion that was announced this week by MacKenzie Scott. This brings her pandemic related giving to almost $6 billion for 2020. I didn’t recognize the name MacKenzie Scott. I learned that she is the ex-wife of Amazon founder Jeff Bezos.

After their divorce in 2019, she received 25% of Bezos’ Amazon stock, making her one of the wealthiest people in the world. And the third wealthiest woman in the world. She promptly pledged in 2019 to give away the majority of her fortune over her lifetime.

Due to the pandemic, she has rapidly accelerated her charitable giving as she saw the great need. She announced this week that she has provided $4,158,500,000 to 384 organizations in all 50 states over the last four months (you can read about her incredible donations and the charities that she donated to here). She and her philanthropic advisors identified charities and organizations which provide basic needs such as food banks, emergency relief funds, as well as other issues which have worsened due to the pandemic.

As this difficult year comes to a close, I thought it was important to recognize that many of us are very fortunate and grateful, in so many ways. While we and our clients have incurred financial gains this year, many others are struggling.

While none of us can have the impact that MacKenzie Scott or Bill and Melinda Gates are able to, each of us can make a positive difference by donating to assist others who have been affected by the pandemic in some way, due to no fault of their own. We realize that charitable giving is very personal, but we hope this inspires you.

We hope that each of you and your families enjoy safe and Happy Holidays! We wish each of you the beginning of a Happy and Healthy 2021!

Note about the future of the blog: The blog will not be written for the next two weeks, as next Friday is Christmas and the following Friday is New Year’s Day.

The blog will resume on Friday, January 8th and continue every other week beginning in 2021, after writing weekly since June 2014.

Talk to us.  We want to listen.  We want to assist you, your family members and friends.

 

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