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Q4 2020 Market Insights

For many of us, a new year and a new start is something we’ve been looking forward to for some time. 2020 tested our grit but it also gave us hope. We witnessed unified global effort as vaccines developed at a record pace, businesses found ways to adapt to a socially distanced economy, and communities band together to support those in need. The S&P even finished up 16% closing at all-time highs. The health, environmental and socioeconomic challenges of the past year also positively influenced many investors and corporations to reexamine their moral compass. Impact investment funds saw record inflows and investors earned competitive returns by matching their investments with their values. A continued recovery over the next year could provide a supportive backdrop for assets, but the lingering effects of the pandemic are likely to lead to uneven global growth and continued market volatility.

At home in Jackson, our busy summer carried into a busy fall and off-season. National Park visitation numbers were up almost 50% year-over-year through November and lodging occupancy exceeded 2019 reservations. Construction and real estate didn’t skip a beat either. Total real estate sales volume in 2020 eclipsed 2019 figures by 103.5% reaching $1.89 billion. Charitable giving grew in tandem; donations during the 2020 Old Bill’s Fun Run community fundraiser exceeded previous gift records by 7% and raised $15.3 million for local nonprofits. Locally, our community’s efforts to curb and mitigate the spread of Covid-19 remained strong. With almost double the snowfall of many resorts in the Rocky Mountain West, strong skier and tourist traffic to Jackson Hole is likely to continue, requiring a communal effort to keep our town healthy.

For the markets, 2020 was a year of uncertainty and volatility coupled with patience and perseverance. The S&P fell 35%, bottoming on March 23, ending the longest bull market in history. A quick bounce higher over the following week then ended the shortest bear market on record. This set the tone for 2020 as market volatility was the only constant, which tested investors nerves through the final days of the fourth quarter. Those that held to their investment strategy enjoyed gains as the Dow and S&P closed the year at record highs and the tech-heavy Nasdaq surged 44%.

Looking ahead, the global economy is poised to grow just over 5% according to most forecasts. China and the U.S. are on the leading edge of the recovery while Eurozone economies struggle to avoid a double-dip recession caused by the virus’s resurgence. Inflation is projected to rise but remain below the central bank’s target of 2%. Alongside the Fed’s continued monetary support, this will lead to further dollar deterioration, keep interest rates low and likely push equities to new all-time highs as sidelined cash is redeployed in 2021. Renewables and green technology are also slated to see continued growth. Long-awaited changes to the corporate landscape have also arrived, as boardroom diversity and socioeconomic equality have rightfully risen to the forefront of corporate policy, as witnessed by a recent Nasdaq mandate.

One way to identify opportunities in 2021 is to take an impact investment approach with your portfolio. Also referred to as Environmental, Social, and Governance (ESG) Investing, this approach helps to prioritize issues such as climate change, boardroom composition, and human rights. Research is beginning to show that ESG-focused companies tend to be industry leaders. They place a high importance on things like human capital which often leads to higher employee retention and attracting talent. They also tend to favor innovation and development, helping to better identify industry shifts. This year for instance, many alternative energy investments experienced large gains as renewables overtook coal in energy generation and the new administration prioritized climate change policies. We feel strongly that an impact investment approach could produce better outcomes for investors, our communities and the global landscape as a whole. As 2021 gets underway we are focused on helping our clients make an impact on their portfolios and the world around them. You can invest with purpose while pursuing your financial goals.

As we embark on the new year, we wish you and your family health and happiness. 2020 was undoubtedly a turbulent year that tested our resilience but it also enlightened us to new perspectives. We look forward to helping our clients make an impact on their portfolios and the world around them as we make 2021 the year to invest with purpose. 

Sincerely,

The Wind River Capital Management Team

**Wells Fargo Advisors Financial Network did not assist in the preparation of this report, and its accuracy and completeness are not guaranteed. The report herein is not a complete analysis of every material fact in respect to any company, industry or security. The opinions expressed here reflect the judgment of the author as of the date of the report and are subject to change without notice. Any market prices are only indications of market values and are subject to change. The material has been prepared or is distributed solely for information purposes and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Additional information is available upon request