Investors who rode out the 2020 market turmoil know the value of patience in the face of adversity. A brutal recession and bear market was followed by the fastest rebound in history, with U.S. equity markets hitting new record highs throughout the fourth quarter and into 2021.
Should investors expect another wild ride amid an ongoing pandemic this year? Have technology stocks run too far too fast? Will U.S. stocks outpace other markets again?
Equity portfolio manager, Rob Lovelace, addresses these questions and more in a wide-ranging Q&A interview:
Q: What’s your outlook for equity markets and the global economy in 2021?
I use a three-part framework that focuses on COVID-19 and the public health issue as separate and distinct from the economy, and separate and distinct from the capital markets. There's obviously some degree of linkage, but people assume there should be a direct cause-and-effect relationship and that’s not necessarily the case.
Starting with the health issue, we’re going through a very difficult time in many countries right now, but we have the hope of the vaccine rollout. So even though I think we'll continue to have flare ups in different regions, we should be able to deal with them more effectively and they will have a diminishing impact on the economy.
In terms of the stock market, we hit the bottom last Spring and we are seeing signs of recovery everywhere. The U.S. and Europe have done relatively well, and emerging markets have been very strong, driven by China, where we are seeing not just a solid economic recovery but sustained growth going forward.