To our Valued Clients,

We think it is safe to say that 2020 will go down in the history books as a year we shall not soon forget. When writing our year end letter last year we had some concerns for the economy going into 2020 but we never imagined what would unfold. The week of March 13th 2020 the Western World changed forever as the U.S. and Canadian Governments starting locking down the borders and we’ve been talking about the “new normal” ever since.

If you fell asleep on Dec 31st 2019 and woke up today and looked at your portfolio you would think this has been a decent year but you would have missed all the “fun”.

March saw the worst 3 week period that the stock market has ever experienced followed by the best 50 days in history.

The markets continued to rally despite the worst economic conditions since the Great Depression mostly because of the unfathomable amounts of stimulus money that Governments around the World have been printing. Only 2 years ago, Modern Monetary Theory was a fringe economic idea but on March 26th of this year it was no longer a theory as it was fully unleashed on the Western World. There has been a lot of talk this year about letters. We were trying to figure out if we would be in a U, a W or V or worst of all an L shaped recovery. 2020 was such as unique year that by the fall economists had coined a new term for the recovery: we are in a “K shaped recovery”, meaning that we are seeing some areas of the economy not being affected or in some cases growing at amazing speeds, while others are being left behind.

This dichotomy in the economy is also playing out in the markets where it has been a tale of two worlds, or better yet two eras. We have what we have termed the “old economy” such as the banks, oils, retailers, utilities, telecos, etc. and the “new economy” such as online shopping, artificial intelligence, gene splitting, digital payments, cybersecurity, 5G networking and renewable energy. The new economy stocks have been flying high with companies like Shopify up almost 2.5x this year making it the largest company by market cap in Canada. To put that in perspective, Shopify was founded in 2004 and it went public May 21, 2015. I don’t know of anybody who thought Shopify would overtake RBC, as the largest Canadian Company, at least not so quickly. This happened while the “old economy” companies are still flat to negative for the year. We believe that these trends will continue over the years ahead as the World adjusts to the reality of post Covid, while integrating the massive changes that technology will accelerate into our lives. Stay tuned for a future note on these new versus old economies.

As we look forward to 2021 we are excited. We’re excited because we spent the past twelve months investing in our business to serve you better. In March, we brought on Mitch as another Client Associate to help support our communication and back office. We have partnered with three independent research companies to help give us more clarity and understanding of the “new economy” world. During the early summer months we started working with our partners in Toronto on the relative risk profile of our managed portfolios and over the past 4 or 5 months we’ve noticed a much improved risk profile on the portfolios.

We worked with our financial planning and estate planning partners to deliver dozens of plans. The delivery of plans will be a focus in 2021, as we believe that all our clients should have a financial plan in place. Having a plan will help give you some clarity around your financial health. They will also help us uncover potential blind spots in your financial future, as well as ensuring that we have the appropriate level of risk across your investments.

Here’s to a wonderful 2021, may it be full of health, wealth and happiness.

 

Andrew Lacas, CFP, CIM, RIAC                           Peter Lacas

Portfolio Manager                                                 Investment Advisor

Lacas Advisory Group                                          Lacas Advisory Group