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2020: A Boring Year?

Minutes after US markets closed for the final time in 2020, a Twitter user going by the handle @TheSpeculator0 posted the partially redacted chart below with the following commentary:

“kind of a boring year”

For reference, the chart above illustrates the 2020 performance of the S&P 500, an index of the largest publicly traded companies in the US. The S&P 500 was up 18.4% in 2020, roughly 8.4% higher than its long-term historic annual average.

While the writer was almost certainly attempting a healthy combination of humor and sarcasm, they also made a powerful point. In a year where we saw one of history’s worst market downturns alongside a once in a century pandemic that took almost absolute control of the globe, if you redact the period of mid-February through July, the performance of the S&P 500 looks downright normal, if not unusually calm.

Of course, when we remove the redaction and show a similar chart for 2020, this one from Yahoo! Finance, we see a slightly different story, albeit with the same outcome.

There are any number of directions we can take this. How often should we look at what the market is doing? How do we react to bear market cycles? What do we feel when certain companies grossly outperform others? Will the “new normal” be drastically different and, if so, how should we rethink our market strategy?

We almost never get a bear market or recession where we know it’s happening in the moment. Typically, we are already in the midst of recession before the realization takes place. We also rarely get a recovery as swift as what we saw in 2020.

For those with investments in public markets, which is most of our readers, being able to look back on our feelings and actions while still fresh in our minds makes this an excellent time to review how we handled the past year and whether our financial plan and investment strategy fit our risk tolerance and ability to maintain or achieve our goals.


While no investor feels good watching the market plummet, especially as quickly as things fell in 2020, did you feel the need to make drastic change? If so, when did this feeling arrive? These urges almost never come before, but during the downturn itself, meaning action includes realizing some, if not the full brunt of the market’s losses at that point in time.

We never advocate for making these kinds of changes solely for the reason of market turbulence. Why? Not because we don’t share fears and concerns around such events, but because history shows us that taking action as things fall almost never ends well.

Even if you do manage to get out before the bottom, when will you be ready to reinvest? In the case of 2020, were you feeling particularly positive about the future on March 23 when markets bottomed? In April, as the recovery took hold? Maybe in late summer when parts of the market reached new highs? Depending on when investors that bailed out of markets did most of their selling, waiting just a few months caused tremendous damage to be done.

Again, no one enjoys a market downturn, but take a moment to assess how you felt. If you dreaded looking at an account statement or avoided financial news for a time, yet ultimately stuck things out and continued to follow your plan, you’re probably in good shape. But if feelings were stronger than that or if you did take action, it might be time to discuss whether your portfolio is well aligned for the long term, as it’s only a matter of time before the market turns bearish once again.


The market provided tremendous disparity between winners and losers in 2020. In August, the S&P 500 was up 10% for the year, an indication to some that markets were all the way back. Yet, upon closer inspection, many asset classes were still sharply negative for the year. In fact, 495 of the 500 companies in the S&P index combined to return a negative -3% at that time with just five (Apple, Microsoft, Alphabet, Facebook and Netflix) returning a combined 49% to make up much of that difference.

There were other winners as well. Chief among them, it was hard to miss headlines about Tesla’s performance. Jeannette blogged recently about it briefly becoming the most valuable company, albeit at a price to earnings ratio of more than 1,250.

Others weren’t as obvious. Looking again at the S&P 500 in 2020, while Amazon and Apple’s returns of more than 67% are impressive, I bet most of us missed Etsy, the e-commerce platform for at-home arts and crafts, returning nearly 275% for the year.

Impressive? Yes. Sustainable? Unlikely. And while it is natural to daydream about betting it all on that next great company, it is no different than thinking about what we might do with a Powerball jackpot – and the odds are about the same.

Here again, in assessing our reaction, if that FOMO (fear of missing out) was nothing more than a fleeting thought, no harm done. But, if those feelings become too strong to ignore, it may be worth discussing the risk in your portfolio and determining if you need to carve out a few bucks for some speculating or increase your allocation to stock to help you stick through various cycles throughout a long-term investment experience.


Regardless of where you fall in your self-evaluation of these questions, the point is we simply cannot know what is going to happen next. This is true in a pandemic, but it is also always true. We see stories about “returning to normal” as the rollout of the vaccine begins and, while we do hope to regain some normalcy in the world, it won’t be like it was. It never is. Our world evolves in ways, large and small, on a constant basis. We adjust as a society and so do markets.

Who will be the next Tesla? We don’t know, but we know we need to own it.

What will cause the next downturn? We can’t possibly say, but we need to have our portfolios positioned so that our goals can still be met while we ride out the market storm when it arrives.

The time to review you homeowner’s insurance policy is not when the fire starts in the kitchen. Similarly, the time to review how you’re invested isn’t in the midst of a significant bear market. As we hopefully continue to recover, now is a good time to reflect on how you felt about your finances over the last year. Doing so can help ensure you’re positioned in such a way that, regardless of the normal feelings that occur when markets go through various cycles, you’re able to maintain discipline. History shows time and again that doing so is the best path forward when it comes to meeting our goals.

As we’ve heard so many times over the last year, “this, too, shall pass.” The fundamentals of investing and how markets work likely will not.