2020 Q4 Newsletter
2020 Q4 Newsletter
Looking Ahead
Data as the New Oil
Optimism and Fatigue
Looking Back
Holiday Spirit
Recipes
Looking Ahead
Market pundits draw on historical behaviour to make estimates of future behaviour. This works reasonably well during “normal” markets, but you don’t need us to tell you that 2020 was not normal. When the virus began to spread early this year, we did not know what the rate of infection was or how deadly it would be. We did not know how we would cope and how long it would take to learn how to treat and to develop a vaccine. Fear was prevalent and markets dipped rapidly.
You know what happened next: Human ingenuity.
Companies were already incorporating more and more technological solutions, the pandemic has accelerated that process.
Expectations for 2021 include an extension of government programs for a few more months to help those the most affected, continuing low interest rates and low inflation. Vaccination will become widely available over the coming months, allowing a return towards normalcy and a reduction of those government efforts. A new US administration should also ease trade and other policy uncertainties. As this happens, economic activity will broaden and businesses able to innovate and become more efficient/productive will benefit. (More on this below.)
Data as the New Oil
In May of 2017 The Economist ran an article: “Fuel of the future, data is giving rise to a new economy”. The argument it made was that “Data are to this century what oil was to the last one: a driver of growth and change.”
An article this month “Reasons to be cheerful: The pandemic could give way to an era of rapid productivity growth” discusses why there has been a lag in seeing improved productivity numbers (and growth) from the use of data.
While collecting the flood of data has been the first challenge for businesses, the major one has been creating the tools (algorithms) to benefit from this data (an analogy from Google is that algorithms are the recipe to the ingredients of data). Artificial intelligence is the broad term used to describe using this data effectively. Economists label AI as a general purpose technology that, like electricity did, has the ability to boost productivity across many industries. But it takes time and experiments to do so. One study suggest the results follow a J curve, with an initial drop in productivity and growth as companies struggle to incorporate solutions, but at some point it all comes together and growth rapidly increases.
The argument in the recent article suggests the pandemic has forced companies to adapt quicker, make better use of digitization, automation and better use existing resources. Old analogue habits can no longer be relied on to struggle forward (see the chart above). Businesses will change and new opportunities will be found. Which is another reason to be optimistic for markets in 2021.
Optimism and Fatigue
We are all getting tired of this - not being able to see friends and family in person, go to events or travel.
On a positive note, our government has started working with many different companies on vaccines to ensure we have access once they became approved, though perhaps not all the options will be viable. We are all aware of the rapid rise in infection rates since September, the graph below illustrates our (much lower) infection rate compared to the US and Europe.
The Pfizer/BioNTech vaccine has begun to arrive in Canada, but even with all the pre-orders from many different providers, it is going to be several months before a significant number of us are able to be vaccinated.
A useful analogy to the fatigue we are all feeling is the “wall” marathoners have to push through. This wall (often referred to as the halfway point) occurs around mile 20 of the 26 mile marathon, as the last 6 miles can take as long to run as the first 20. We are probably at this point in pandemic, the end is almost in sight but it will become increasingly hard on all of us to get through to the other side.
Christmas will be a challenge this year in many ways. Over the last few years, our year end newsletter would list some things to do over the holidays, for 2020 the list has been whittled down to grocery shopping and walking at midnight to maintain a safe bubble!
Highlights will be driving through Granville Island or by the Legislature in Victoria to look at the lights.
Looking Back
What were people thinking about over this last year? It is easy to forget everything that has happened, and we enjoyed the following list of top Google searches from CTV: https://www.ctvnews.ca/lifestyle/these-were-canadians-top-google-searches-in-2020-1.5223360
Holiday Spirit
We found the following commercial from Tim Hortons as an uplifting reminder of the holidays in Canada and we hope you enjoy it too: https://www.youtube.com/watch?v=QUzOcCIcPYI
Recipes
We wanted to include a couple of ideas for Christmas, one simple downsized idea for turkey and one decadent choice to spoil yourselves.
Check out our recipe page here: https://www.beaconwealthpartners.ca/recipes
We wish you health, happiness and tranquility over the holiday season.
Travis Kidson, B.Sc., CFP®
Investment Advisor
HollisWealth, a division of IA Securities Inc.
Insurance Advisor
Hollis Insurance Agency
Tel: 604 895 3486 / 1-800-665-2030
travis.kidson@holliswealth.com
Jack Fournier, B.Sc., FMA
Investment Advisor
HollisWealth, a division of IA Securities Inc.
Insurance Advisor
Hollis Insurance Agency
Tel: 604 895 3348 / 1-800-665-2030
jack.fournier@holliswealth.com
This information has been prepared by Jack Fournier and Travis Kidson, who are Investment Advisors for HollisWealth® and does not necessarily reflect the opinion of HollisWealth. The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. The Investment Advisor can open accounts only in the provinces in which they are registered.
*Insurance products are provided through Hollis Insurance Agency. Only services offered through HollisWealth®, a division of Industrial Alliance Securities Inc. are covered by the Canadian Investor Protection Fund.