4th Quarter 2020: Happy (Finally!) New Year!

To Play It Safe I've Stopped Shaking Hands and Hugging

Firm Highlights
JAG continues to make long-term investments in our clients and our future growth. Last quarter, we welcomed two more members to our JAG Team. Wealth Advisor Connor Pastoor joined our Chicago office bringing with him a wide range of wealth management experience in investment management, financial planning, and intergenerational wealth transfer advice for high net worth families and individuals. Keila Gonzalez brings her skills to our St. Louis office as Operations Specialist.

Happy (Finally!) New Year!

The COVID-19 pandemic has been supremely challenging for many of our colleagues, clients, families, and our broader community. While we respect the challenges that continue to face all of us as we approach the endgame of the pandemic, JAG has chosen to build for the future throughout this time of unprecedented societal disruption. In 2020, we made significant investments in our human and technology capital. JAG welcomed several new investment professionals and made some important enhancements to the software we use to research securities, manage, and track our clients’ portfolios. As active investors in highly selective, customizable, and nimble portfolios, we are confident these investments will accrue for the long-term benefit of our clients.

Although the global COVID-19 pandemic continues to rage, the emergence of promising vaccines — which were developed, tested, and approved in record time — has raised investor hopes that we could soon be approaching the end of this health crisis. The S&P 500 generated double-digit gains during the 4th quarter, capping a remarkable 68% rally from the March lows and delivering a total return of more than 18% for the full year. As we have previously noted, the global size and speed of monetary and fiscal stimulus to respond to the very real COVID-19 economic trauma has almost certainly contributed to the epic rally in stocks since last spring. Our Federal Reserve has been joined by the rest of the world’s central bankers in adopting a firmly dovish stance on interest rates, which will likely remain in place through 2022. In the U.S., Congress and President Trump have injected trillions of dollars into the domestic economy, and it appears more will be forthcoming under a Biden Administration after Inauguration Day on January 20, 2021.

Interestingly but perhaps not surprisingly given the benign interest rate environment, long-term Treasury bonds joined stocks in delivering a banner year in 2020. According to Bespoke Research, the tiny gap between the 17.3% return of the BAML Long-Term Treasury Index and the S&P 500’s 18.4% total return was historically unusual. Going back to 1978, the annual performance gap between long-term Treasuries and stocks has averaged 15%. The year 2020 was one of only seven instances over the last 43 years in which the spread in yearly performance of these two asset classes has been less than 5%. Indeed, last year was marked by a range of improbable and unprecedented occurrences. The stock market went from an all-time high into a bear market in 16 trading days, then proceeded to enter a new bull market in only 12 trading days. Oil futures briefly traded at negative $37.63/barrel. Three of the top 10 single-day gains and losses over the last 60 years for the S&P 500 occurred in 2020, as did the largest number of 1%+ single-day movements since 2009. For long-term investors, the past year was a reminder that when it comes to the markets, we do well to “expect the unexpected.” 2020 was a fascinating, educational, and exhausting exercise in navigating the capital markets’ sometimes-stormy seas.

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