Antony’s Top 3 Lessons from 2020

By Antony Barton, Independent Financial Adviser at Robertson Baxter

I appreciate that many of you will understandably want to forget last year. But if you look at some of the financial headlines, 2020 was one of the most remarkable years for global financial markets. We saw some amazing lows but equally impressive highs:

• On the 3^rd February, China’s stock market dropped 9%.

• On the 12^th March, London and New York markets dropped 10% each in their worst days since the 1987 crash – the FTSE 100 had already dropped 7% in one day at the start of that week.

• By mid-March, the FTSE 100 reached its lowest point, having lost a third of its value.

• Soon after this, Russia and Saudi Arabia launched an oil price war.

• 5 million Americans lost their jobs in April alone.

• The UK suffered the worst recession on record after GDP shrunk 20% in April-June.

But then…

• The FTSE 100 posted its best three months since 2010 in April-June.

• The Nasdaq jumped more than 40% in 2020.

• The Dow hit 30,000 points for the first time.

• Global stock markets end the year c13% up – two-thirds higher than the March lows.

What can be learned from 2020?

1. The key takeaway is that you should make an investment plan and stick to it, regardless of short term market events.

2. It also helps to ignore the media – nothing makes a good headline like a 10% drop in markets or ‘financial panic’, but the rises don’t get the same coverage. Having a well-diversified portfolio across assets, sectors and regions is what’s important – for example, in the UK, the FTSE 100 still fell 14.3% in 2020.

3. Lastly, 2020 showed us that money isn’t everything: it couldn’t buy anyone health or immunity this year. Spending time with family and friends, whether from behind a mask or a computer screen, became a priority as more material concerns fell away.

Hopefully we can carry these lessons into 2021 and beyond, whatever the year may hold.