Here we are at episode 52 of the Money and Investing Show capping off the year that’s been. Amidst Covid-19, dividend cuts. A presidential election and newfound trade tensions with China. This has certainly been a year for the history books. Here’s year 2020 in review through the eyes of the Money and Investing Show:
A Year for the History Books
Certainly 2020 has been a great year on some metrics. But wow will this year go down in the history books as one of the most unique set of circumstances of all time. After 52 episodes of the Money and Investing Show we certainly have covered some ground on major headlines dominating the news flow across the country – COVID-19, dividend cuts. The presidential election, the market rally, China trade tensions, and everything else in between. As this marks the last episode for 2021. Here is a recap of our biggest key events through the year.
This wouldn’t be a year in review without mentioning the elephant in the room – COVID-19. Not only did we see millions of individuals come down with a killer virus. But we also the market sell off somewhat 40% and erase almost 10 years of gains in just a couple of weeks. This sent shockwaves through the investment community as Aussies gave back trillions in their portfolios over such a short period of time. Obviously, there were those who profited heavily to which we made note of. Specifically in a broadcast called ‘Corona Virus Investment Opportunities’ amidst the hardest bull market rally of all time.
The Yield Desert – The Banks Cut Dividends
Before the likes of COVID even really started having an effect on our economy. Hosts Andrew Baxter and Mitch Olarenshaw covered the decline in dividends called the ‘yield desert’ all the way back in episode 19. Then, COVID wreaked havoc on our economy and the big 4 banks all axed their dividends – something never before seen in history. This left a lot of income focused retirees left high and dry as the banks opted to retain cashflow for emergency spot fires rather than paying out their investors. Certainly, another shockwave through the investing community.
The Economic Re-start
After COVID-19 had done its thing and the banks cut its dividends there was a lot of pressure on our government. To kickstart the economy through various stimulus packages amidst record levels of unemployment. We saw the likes of job keeper and jobseeker come into play. A release of arguably the most important budget in Australia’s history and early access to super. As we printed money like it was going out of fashion. However. We saw consumer spending and confidence hit record highs during a time. When no one had any work – a topic covered in the episode ‘Irrational Economics’.
The Presidential Election
Aside from COVID-19, 2020’s presidential election. Has probably been the biggest focal point of the year. The grudge match led to the new office of Joe Biden. As the Democratic candidate wasn’t only a circus show – it also had a huge effect on markets. Ending up with a democratic presidency and republican senate fared well with investors. As their clarity and certainly grew – leading markets off to the races. It is arguably the most divisive presidential election of all time. This was certainly a grudge match for the history books.
Vaccines Spur a Market Rally
Not long after newly elected President Joe Biden came into office did we see COVID-19 vaccines announced. And just a few days apart from each other by companies like Moderna and Pfizer. At 90-95% effectiveness, not only did this give our community hope for a swift economy recovery. But it also spurred the market on for its best month since 1987. The Dow Jones, S&P500 and Russell 2000 averages all hit record highs in November rising up more than 10% for the month each. Our Aussie market also had its best month in since 1989 rising somewhat 9.8%. After an application for emergency use. And the world took a breath of fresh air as we looked to return to normality sooner rather than later.
Property Market Booms
Another market that particularly saw some strength at the back end of this year was the property market. Despite rental yields at all-time lows and vacancy rates at 1/7 investment properties – prices have remained at all time highs. This comes as the RBA maintains their lowest ever cash rate at nearly zero in order. To help borrowers gain access to cheap money. And keep the economy churning.
China Trade Tensions Ramp Up
As a really sad state of affairs our relationship with our biggest trading partner has taken a huge blow towards the end of this year. As we have become so reliant on exports to China for resources like barley, wine and coal – many other markets have suffered as a result and now given the relationship has dampened nobody wins. Tariffs on exports and threats over the South China Sea has certainly ramped up tensions to finish on what has already been a challenging year.