- In December the stock markets continued to push higher, mostly influenced by the roll out of COVID-19 vaccines. The S&P 500 Index finished 2020 with a return of 18.4%, an incredible feat considering 2020 also experienced the largest decline in value since the Financial Crisis. For the Nasdaq, it was best year since 2009 with a 43.6% gain.
- The growth in equity markets extended globally as well, with developed International, seen through the MSCI EAFE, up 7.82% and finally MSCI Emerging Markets was up 18.31%.
- The US Aggregate Bond Index also finished up for the year with a total return of 7.51%, driven by historically low rates and increased face values.
What we did:
- Exposure to global equities along with US mid cap helped make up for a lagging conservative sleeve in US Treasuries (BND). Proxy also tactically added more US for the month with US Technology (IYW).
- Individual stocks did well again in December. We continued to hold our winners but trimmed some of the exposure to fast growing stocks like QuantumScape (QS). Snowflake (SNOW) was added to the portfolio towards the end of the month as it slid back off of its highs towards a more attractive price.
- Our conservative allocations remained overweight in US government issues and the high-quality end of the market. We are avoiding high yield and emerging market debt altogether.
What we are watching:
- The next round of stimulus in the US will be a core concern of Wall Street, as the market has priced in a good amount of stimulus to promote the American economy. Any disappointment there will sour returns.
- We continue to keep an eye on the upcoming US Senate election, which might tip Washington’s status quo as there is a real possibility of having an all-Democratic government.
- Looking out into 2021 Proxy is hopeful we will put a traumatic 2020 behind us, but recognizes it may not be a smooth road. We will be looking to trim risk as market valuations become unrealistic and tactically add risk when the time is right.
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