Language | 
English
Spanish
Over the fourth quarter of 2020, global equity markets continued to rebound off their spring lows despite a resurgence in Covid-19 cases in the U.S. and U.K. and renewed lockdowns in many countries. Ongoing massive fiscal and monetary stimulus, improving profits and an apparent end to the American election drama fueled risk appetite and led to strong markets going into year end. Over Q4 the LOM Equity Growth Fund gained 15.88%. Top performing sectors during the quarter included Energy (+30.1%) , Financial Services (+23.8%), and Communications (+15.6%.)
Despite heightened political and pandemic volatility, developed markets registered respectable performance for the quarter and for the year as a whole. During 2020, the MSCI World Equity Index advanced by 14.1% and the Dow Jones Industrial Average improved by 7.2%. Emerging markets (EM’s), led by China, caught up to developed markets late in the year finishing on an upstroke despite the asset class lagging early in the year. But still, important sectors such as restaurants, travel, physical retailing and hospitality continue to be challenged.
Widespread innovation, a rebounding economy and ultra-low interest rates are expected to support profit growth as we proceed into 2021. The average Wall Street estimate calls for S&P 500 profit growth of 22%, from $138 in 2020 to $168 in 2021. Notably, this estimate exceeds the 2019 level of $161. The International Monetary Fund (IMF) expects global GDP growth to rebound by 5.2% in 2021 after declining 4.4% in 2020 from the prior year.
In 2020, China was the only major economy to avoid recession, advancing by approximately 1.9% due to their more efficient lockdown and faster reopening. China’s single party, authoritarian government gave them a global advantage despite the ongoing trade war with the U.S. However, more countries are expected to get back on track this year as the approved vaccines get rolled out. To some extent the speed of global inoculation and herd immunity has become critical for economic growth and risk market performance in general.
Download the PDF article here.
The information contained in this article is for information purposes only, and represent the views of the author. It is not intended as specific investment or financial advice, or a recommendation or solicitation to buy or sell any security. Any investments or strategies listed in this article may not be suitable for all investors. Past performance is not indicative of future performance, and as with any investment, prices may fluctuate. It is recommended that advice is sought from a qualified investment professional prior to implementing any financial plan. LOM has made every effort to ensure that the contents herein have been compiled from sources believed reliable, however LOM does not warrant the accuracy, adequacy, timeliness, or completeness of this information expressly disclaims liability for errors or omissions in this information.
