PFW Annual Market Review - 2020

Est. Reading Time - 7 min

PFW Annual Market Review – 2020

While embarking on writing my 2020 annual market review I look to my 2019 edition for inspiration and conclude that a copy and paste of the opening paragraph could be sufficient – minus some nods to the topic we all can’t stop talking about, ‘Covid-19’.

As I write this I struggle to recall all the stories, the front-pages, the soundbite headlines that hourly came vibrating through my phone. As each market or political commentator reacted in (usually) faux awe and astonishment to that minute’s news cycle ‘breaking news’

It’s safe to say that 2020 trounced 2019 in ‘breaking news’ as we all encountered our first global pandemic. Unemployment hit 15% (50% more than at the peak than in 2008*), hundreds of thousands lost their lives, businesses closed, and stock markets plummeted (Dow Jones fell 37%). Throw in an impeachment (and later two), ‘Black out Tuesday’ in response to George Floyds death, Australian bush fires, an 11th hour Brexit, the US election, border closures, Boris Johnson in intensive care, calls to overturn a legitimate election and of course ‘Mexit’, Harry and Megan stepping away from royal duties!

If my crystal ball were telling me this on January 1st, 2020, I may have favoured putting my money under the proverbial mattress!

Let’s start with a look at how to markets closed on this extraordinary year.

The US S&P 500 finished +18.4%, MSCI Emerging Markets finished +18.7%, Europe Ex-UK +2.1% and UK FTSE All-Share -9.8%. Global bonds finished +9.2%, Commodities -3.1%, and Global REITs (Real Estate) -10.4%.

Source: FTSE, MSCI, Refinitiv Datastream, Standard & Poor’s, TOPIX, J.P. Morgan Asset Management, Global Agg: Barclays Global Aggregate. All indices are total return in local currency, except for MSCI Asia ex-Japan and MSCI EM, which are in US dollars. Past performance is not a reliable indicator of current and future results. Data as of 31 December 2020

It was an incredibly strong year for growth stocks globally +34.2% whilst value stocks remained flat, however, Q4 2020 saw a resurgence in value equities +15.9% over the quarter.

With volatility of -34% to +18% for the S&P 500, the investing winners over the year were those long term, globally-minded investors who stuck it out during the Pandemic Panic Sale of 2020.

In the currency markets, GBP picked up 2.4% against the dollar. While the USD fell against all major currencies (Euro, Yen, Pound), it felt most notably against the Aussie Dollar down just over -9% as each country responded differently to the pandemic.

As we’re told of despair and misery around the world in 2020, why and how did the stock market bounce back so quickly? After all, it took over 4 years for the S&P to recover its losses in the last recession, yet it took closer to 4 minutes for this stock market recovery to happen.


In 2008 the main support program for financial institutions came in the way of TARP (Troubled Asset Relief Program) providing financial stimulus totalling $941 billion. This came late, after many tussles between the then Obama administration and the Senate and following the collapse of one of the largest financial institutions, Lehman Brothers.

In 2020, the Federal Reserve acted quickly. First came interest rates cuts in mid-March to 0%, just weeks, rather than months, after the signs were there of an economic shock and businesses were told to close and citizens told to stay at home. $2 trillion also showed up in March plus $1,200 stimulus checks to individuals which were paid out a couple of months later.

It wasn’t just the US who printed more money to lend to businesses, individuals and buy back bonds. The European Central Bank acted in April and by adding each month between £200-$800 billion of Pandemic Emergency relief to the 27 member states. The UK kept their citizens employed through the furlough scheme paying for the wages of employees who would have been otherwise laid off. Similar efforts in Japan, South Africa, Canada all came swiftly and propped up business, economies, and the resulting stock markets.

Money has been swiftly thrown at the problem in 2020. Businesses struggling were given money in the form of grants, while others have been able to borrow the necessary funds. Consumer confidence never fell to 2008 levels and the savings rate (the amount people are saving each month from their salaries) has risen from 7.9% in 2019 to 17.2% in 2020.

The Banks

What has made this stimulus and lending possible is the relative strength of the banking system this time around. In 2008 the source of the problem was the financial underpinning of the US economy. The system was overwhelmed and banks were on the brink of collapse. As a result of this was a better regulated financial system today and the banks could be used as part of the solution, rather than the problem.

It may be too soon for calling this a job well done, but with a sound financial system and an almost proactive global central bank stimulus effort – the 2008 mistakes were this time learnt.


A deal between the UK and EU has occurred after 40 years together and 4 challenging years of pushed deadlines and posturing. The deal has gone down in a rather muted finale which I think we can take as a relative success.

So what’s set to change:

  1. Travel –UK citizens, armed with their blue passports, must have 6 months left on their passport in order to travel. From 2023 the EU will require an ESTA style travel authorisation for all non-EU travellers and immigration border queues are likely from this point.
  2. Visits of 90 days plus may require a visa.
  3. There are limits on bringing alcohol across from the EU to the UK and limits of £390 on goods purchased.
  4. Driving into the UK and the EU will require a green card from your insurer confirming you have the insurance cover.
  5. EU health insurance cards are gone. However, the UK is expected to issue their own version which will cover you when abroad.
  6. Brits will now need a visa to work in the EU. Student visas will also now be required.
  7. Free trade remains but the bureaucracy has increased.
  8. A ‘level playfield’ must be adhered to by both parties on labour protections, climate change provisions, environmental protections and tax transparency all to ensure fair competition on trade between the two nations.

What did happen to fishing rights? There is now a 5 and half year transition period where EU vessels can maintain fishing in UK waters, but this slowly tails off until both sides then agree a long term solution.

As the dust still settles after the 2,000-page agreement has been dropped in Westminster, the consensus, as we read the tea leaves of the foreign exchange markets and the FTSE, is positive. Yes, more paperwork, yes there are unknowns and they’ll be some challenging and expensive legalities in the coming months and years, but the UK can press forward in creating its new identity on the global stage.


With 2020 as evidence it’s impossible to predict the future, let’s take a look at what we could expect over the year ahead:

  • GBP may rally with some bullish analysts calling for $1.44.
  • Optimism builds as vaccines are rolled out across the world.
  • Year on year earnings to be tremendous – coming from a depressed 2020 data set.
  • Borrowing to continue giving lifeblood to businesses and the markets.
  • The stock market will correct (falling by 10% or more) –historically this occurs every 12 months.
  • News will perpetuate negative headlines leading to unnecessary investor panic and bad financial advice.
  • We’ll all conclude again that we’re living in a  crazy time.

As a company, we’re optimistic as we go into a new year. With interest rates so low, we believe equities are the asset class to hold in the main because of their long-term capital growth and growing dividend appreciation.

We, therefore, tune out “volatility.” We act; we do not react.  This was the most effective approach to the vicissitudes of 2020. I believe it always will be.

It’s been a pleasure working with you this year, and we’re looking forward to many more years to come.

Plan First Wealth is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.  Investments involve risk and, unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.

Retire Happier.

Plan First Wealth Is A US/UK Wealth Management Firm Serving Successful British Expats in America With at Least $1M net worth Make the Most of their Opportunity.

Plan First's WealthHub
Plan First Wealth

Join Our Community

Plan First’s WealthHub is a community of Brits living in America looking to protect and grow our life’s work, retire with confidence, and leave a legacy.

Our members get:

  • 2 updates per month with actionable content delivered to your inbox
  • Access to a private WealthHub Facebook group
  • Access to exclusive monthly online educational events



Any testimonials were provided by current clients. The clients were not compensated, nor are there material conflicts of interest that would affect the given testimonies. The testimonies may not be representative of the experience of other current clients and does not provide a guarantee of future performance, success or similar services.

Plan First Wealth is a registered investment adviser located in Greenwich, CT. Plan First Wealth may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. Plan First Wealth’s web site is limited to the dissemination of general information pertaining to its advisory services, together with access to additional investment-related information, publications, and links. Accordingly, the publication of Plan First Wealth’s web site on the Internet should not be construed by any consumer and/or prospective client as Plan First Wealth’s solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the Internet. Any subsequent, direct communication by Plan First Wealth with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. For information pertaining to the registration status of Plan First Wealth, please contact the state securities regulators for those states in which Plan First Wealth maintains a registration filing. A copy of Plan First Wealth’ current written disclosure statement discussing Plan First Wealth’ business operations, services, and fees is available at the SEC’s investment adviser public information website – www.adviserinfo.sec.gov or from Plan First Wealth upon written request. Plan First Wealth does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Plan First Wealth’s web site or incorporated herein, and takes no responsibility therefor. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

This website and information are provided for guidance and information purposes only. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy. This website and information are not intended to provide investment, tax, or legal advice. There are no warranties implied.