Economic and Stock Market Recovery

About This Episode

With public policy and multiple forced lockdowns in 2020, we knew we’d see a major impact on the economy unlike the recessions and bad economic periods we’ve seen in the past. Today, we’re focusing on recovery.

Recovery has two main parts, economic and the stock market. Where the economic recovery reflects what’s happening on Main Street, the stock market recovery looks to the future. For this episode, we’ve broken down this stock market recovery into three main phases and we’re taking a deeper look at valuations and expected returns for specific types of stocks.

Marcelo and I talk about the stock market and economic performance during 2020, how the 2020 economic contraction compares to historical recessions, economic expectations for the coming years, which investment styles perform best in recession and recovery phases, and so much more!

Thank you for listening!

Key Topics:

• The economic impact of lockdowns in Canada and the US (1:45)
• Overall economic performance for 2020 (3:06)
• How does the 2020 recession compare to the Great Financial Crisis? (4:00)
• Projected economic growth for 2021 (5:14)
• Analyzing S&P 500 performance over the course of 2020 (6:27)
• Putting the 2020 economic contraction into a historical context (8:13)
• Why the dot-com crisis was the most painful recession I’ve lived through (9:33)
• 2020’s V-shaped market recovery pattern (11:33)
• The three phases of stock market recovery (12:40)
• Stock market performance during the lockdowns of phase one (13:40)
• How vaccine announcements affected the stock market (14:45)
• 2020 year-end valuations relative to 20-year valuations (15:53)
• Economic expectations for the next two years (17:36)
• Why economic predictions are unreliable (19:18)
• The potential impact of an extended period of high unemployment and inflation (21:09)
• The performance of value stocks in recessions and recoveries (22:39)
• Distinguishing between a bubble and a shock (23:07)
• How different investment styles perform in a recovery phase (24:16)
• Why a sound investment philosophy is critical (26:00)
• And much more!

Mentioned in this Episode:

• P/E Ratios Matrix for the past 20 years
• Research Affiliates Article | Value in Recessions and Recoveries
• Tulett, Matthews & Associates
• Keith Matthews’ Book | The Empowered Investor: A Guide to Building Better Portfolios