2020 Year End Recap

Dennis O'Keefe |

I can’t tell you how many times I’ve sat down to write these end-of-year blogs and began writing, “This has certainly been an interesting year.”   Perhaps I can’t imagine that circumstances could get more interesting than they already have.  Or maybe it’s just the nature of the beast - good or bad, things are always interesting.

But if I was to start any year-end blog with that statement, this would be that year, wouldn’t it?

The market performed adequately in 2020.  But if we zoom in to the details, we’ve been for quite a ride.  We hit a new all-time high in February only to see it all come crashing down over a three or four week period as the world fretted over COVID-19.

As we sat in Spring quarantine, the market began to recover.  And as the world economy re-opened, the market recovered even more.  By the fourth quarter, we saw new records being reached.  And in the end, the US stock market (as defined by the S&P 500) was up 16%.  

In the meantime, gasoline prices fell and then climbed back again.  Gold and other precious metals rose and then fell but are still higher than they have been in a decade.

A Look Back

It has certainly been a difficult year overall.  We’re ten months into fighting the Coronavirus, and we may know less than we did back in late February.

The volume of statistics published daily and weekly by various state, local and federal governments is staggering.  And if you want to prove your pet theory, you can certainly find data to prove it.

But that’s not science.  You can’t develop a theory and then go looking for data in a place that can prove your hypothesis.  That's not the way science works.

There is a foible of data to prove that masks are a universal help.  And a foible of data to prove they do next to nothing.  

Sweden had a 10-month experiment of “just keep your distance.”  For nine months, it was highly effective.  And then suddenly it wasn’t.  

According to experts, we have new “strains” of this virus that are 70% more contagious.  Seventy percent.  If we can’t tell if masks are 10 or 90% effective after ten months, how are we even determining if this new strain is 70% more contagious???  

Our elected and appointed leaders?  Not one of them is without fault.  Sure you might like this person or that.  But each and every one of them has made mistakes.  There are too many unknown to make a great decision at every turn.  I would not want to be in charge of a government organization during a crisis such as this.

The great news as we enter 2021 is that we have several vaccines approved for use and they are being distributed.  A million people were vaccinated during Christmas week in the United States.  The week of New Years'?  Almost 5 million.  

There are going to be supply-chain hiccups for sure.  Yet within a few weeks, we should be able to easily vaccinate up to 10 million people a week.  That means we could be completely vaccinated by some time this Summer. 

Imagine going shopping or to a restaurant or out for a movie without fear.  I’m sure you are looking forward to it as much as I am.

Looking Forward

As I look to 2021, I don’t focus on who is or isn’t President.  I know that this is top-of-mind for many people right now.  Yet a President has very little influence on the economy.

Here is what I look at:  Where were we in February of 2020 and where should we be going in 2021 and beyond?

Last February, our employment numbers were spectacular.   Despite reaching “full employment,” it seemed as if the economy had more gas in the tank.  This is because the trends were showing that as we hired more people than ever before in this country, people were improving their employment “station.”  

Many workers were seeking re-training, extra education, job promotions, and the like.  This is exactly what you want in your economy:  To move more people up the economic chain.  

The Coronavirus put a huge damper on that.  Yet the signs are that we are starting that engine back up.  

Government data is showing that openings are increasing faster in higher-paying jobs than lower-paying jobs.  People working at McDonald’s today (who can’t support a family) have an opportunity to get an office or factory job tomorrow.  This is exactly how we looked last February!

Explosive economic success clearly hinges on the swift distribution of the Covid vaccine.  In addition, a vaccine means the re-hiring of thousands of service industry workers who have been in crisis since last March.

The final bit of positive prognostication:  By and large, we all have more money in our pockets today.  Remember that for the last 10 months we’ve all spent considerably less than normal.  With no movies and shopping malls and restaurants and vacations, money has accumulated in our collective piggy-banks.

Some folks have already spent that money.  Ask your local contractor or pool installer or landscaper.  They’ve been flat out this entire year - and that trend appears to be continuing.

Others have paid down debt.  Like we learned in 2008, paying down debt provides huge financial dividends in the future.  

And many others put that money in savings.  And a large part of that savings will be spent once the economy fully opens.  And this will help accelerate our economic growth in 2021 and beyond. 

I don't have a crystal ball to ensure there isn’t an unexpected hiccup awaiting us in 2021.  What I do know is, based on what we see today, the economy should be significantly larger at the end of 2021 than today.  And that has to be good for the markets and your portfolio.

News For Existing Clients!

As I’ve mentioned in a few emails over the last month or so, we have some interesting tax strategies for 2021 that we are looking to implement.  Not everyone’s situation will qualify for them.  But if you do, it can help put a significant amount of money back into your pocket instead of Uncle Sam’s.  

We are compiling lists of who might be eligible for these potential breaks based on age and other factors.  (Some of these are age-specific  - thank you IRS!)  We will also be detailing some qualifiers in upcoming emails.  If you are not receiving our emails, there is a link below to sign up.  If you know someone that should be receiving our emails, you can direct them to sign up as well.  We are looking for as many people as possible to implement these strategies.

I’d like to thank you for your trust and support in 2020 - more so than any other year in a long time.  It has been a tough year for everyone and we truly appreciate that you have trusted your finances with us.   

Thanks for taking the time to read our blog this week. If you have any questions or concerns, please don’t hesitate to email us at dennis@successfulmoney.com or call us at (800) 453-3209.  If you don’t already have a copy of my book, The Biggest Financial Mistakes Retirees Make, you can order it on Amazon or click here and we will get a copy out to you, free of charge!  

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This blog is the opinion of Successful Money Strategies, Inc. and is provided for informational purposes only and is not intended to provide any investment advice or service.  Statistics and other figures are accurate at the time of original publishing.  Any advice herein should not be acted upon without obtaining specific advice from a licensed professional regarding the readers own situation or concerns.  Always count your change.