Putting 2020 in the Rearview and Setting A Course for 2021

2020 was a long, difficult year and our hearts go out to the families who suffered losses due to COVID-19. We all hold a deeper appreciation for the medical community and frontline workers who selflessly sacrifice each day and whose vital function in society has been forever spotlighted. Despite the chaos from social injustice, months-long riots, mandatory lockdowns, and a contentious election, Roehl & Yi is optimistic the economy will continue its recovery as we adjust to an evolving new normal.


No economist could have predicted the devastation COVID-19 would have on the global economy, including record low U.S. unemployment prior to COVID-19. Weekly jobless claims reached a high of 3.28 million at the end of March* (compared to 600,000 weekly jobless claims during the 2008 crisis), the likes of which we’ve not seen since World War II. The economy froze under the weight of shelter in place, which caused, specifically, the oil, restaurant, travel, airline, and cruise industries to come to a grinding halt. This level of catastrophe was simply unimaginable.

Roehl & Yi saw what is considered a K shaped recovery. Some industries did well, while others abysmally poor. For example, the restaurant industry sank, and we saw permanent business closures. The upper right of the K represented businesses which performed very well such as the wood products industry to meet demand for a quick recovery in housing, increased home improvement projects, and storefront protection from civil unrest. The bottom right part of the K were businesses that continued to struggle like restaurants, airlines, and the commercial real estate market. Retail malls and office space experienced reduced activity and demand due to stay-at-home mandates.

*May 9, 2020 New York Times.

The Brightside of 2020

Although we saw the unemployment rate reach a high in April of 2020 (14.8%), there was a dramatic improvement by December of 2020 (6.7%).

 Stock market
The S&P 500 was up 18% for the year after being down -34% on March 22nd, 2020.

Almost all asset classes beat expectations and by the middle of the fourth quarter 2020, small cap equity had roared back +30% for the quarter. We also saw the reemergence of large- cap value stocks. Large-cap value outperformed large cap growth stocks, and international equities and emerging markets outperformed the S&P 500 during the last quarter.

Similar to what occurred in the late 1990’s, 2020 was the year of the Initial Public Offering (IPO). Even during the pandemic, several companies experienced successful IPOs including Rocket Mortgage, Snowflake, Palantior, Doordash, and Airbnb. Airbnb’s expected pre-market price per share was $64, but opened at $146 per share, making Airbnb (market cap of $104 billion) worth more than Goldman Sachs ($101 billion), a 140-year-old company.*

*Source: Morningstar. Goldman Sachs was founded in 1869.

Electric car maker, Tesla was added to the S&P 500 in late 2020. Tesla’s market value swelled to $616 billion, more than the nine largest automakers combined including Ford, Honda, BMW, Toyota, GM, and Volkswagen. However, Tesla’s sales and revenue numbers did not match its valuation, something to watch as an investor especially given Tesla’s lofty valuation.

In 2020, we experienced the largest spread in history between the best performing and worst performing market sectors. The best performing sector was technology (up 43.89%), and the worst performer was energy (down -33.68%).

Housing market
The residential housing market which historically performs on par with a recession, did very well in 2020, outperforming what we’ve seen in the past 10 years. This growth was driven in part by low interest rates and heavy migration.

We saw a population shift to and from certain states for personal, political, tax, and other reasons. For example, movement from California to Texas and Arizona, and to Florida from the Northeast. In addition, the lockdowns triggered the availability of working from home and telecommuting, further spiking relocations.


Wall Street is optimistic that the economy will continue its recovery in 2021. GDP growth is estimated to be strong at 5.5% (Goldman Sachs) and 7% (PIMCO).

If this reality comes to pass, we may see a strong economy like pre-pandemic levels. This forecast is driven by several key assumptions and factors:

  • A COVID-19 vaccine that proves successful and is widely distributed.
  • Excess liquidity in the system from the federal government via stimulus and infrastructure spending.
  • Personal and corporate cash reserves plus pent-up demand means more consumer and corporate spending.
  • Extreme low interest rates remain with us in the near-term.


Small and medium-sized businesses, depending on the sector and region, could experience continued difficulty. We would caution lower return expectations for the S&P 500. Another observation revealed in the fourth quarter of 2020 was the importance of diversification.


One of the hardest parts of investing is patience and discipline. A sound, long-term investment plan is one designed and driven by your financial goals. This is always critical but takes on more importance given the uncertainty with a new administration, a still smoldering political undercurrent, and questions about vaccine distribution and its effectiveness. Consider these four things:

  • Focus on diversification.
  • Be prudent in your approach and stay within your tolerance for risk.
  • Make sure your investment portfolio is aligned with your financial goals.
  • Invest in asset classes appropriate to supporting your financial plan.


Roehl & Yi has made a commitment to delivering more value through enhanced client engagement, new educational videos, resource-filled emails, and more. As always, we are here to answer any questions you may have and thank you for your continued confidence in Roehl & Yi.

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