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Investment Insights from the Advisers at Heritage

| December 28, 2020

Investment Insights from the Advisers at Heritage

Dave Hinde: Hello, glad you could join us. My name is Dave Hinde; this is Charles Hinde. We’re with Heritage Investments, and we’re glad you could join us for just a little bit today. We want to take a look back at the year of 2020, maybe take a look ahead at 2021 with the economy and your investments. It’s a new day and age.

Charles Hinde: Yeah, it’s been a weird year.

Dave Hinde: Yeah, we’re six feet apart.

Charles Hinde: That’s right.

Unfortunately, Dave Richmond and Scott Hinde couldn’t join us for space reasons and wanting to social distance. You know, we look back on this year, and you know a lot happened.

Charles Hinde: Oh my gosh, yeah.

Dave Hinde: This time last year we weren’t even really thinking about coronavirus, and we were looking forward to the holidays, hoping the Chiefs could maybe make a run to the Superbowl. Which was a big deal. I feel like that was almost the last good thing that happened in 2020. But here we are. Obviously, this year we saw a widespread global health pandemic; we saw polarized politics; we saw social unrest; you know, people losing jobs; there were even some serious weather events that really disrupted a lot of things in people’s lives; and it was a hard year for a lot of folks.

But, as we look kind of back at this year — I know that you spent a lot of time talking with Dave Richmond just about the idea of staying diversified and staying with an investment plan, if you want to talk about that just a little bit.

Charles Hinde: Yeah, of course. You know I think we spent a lot of time talking about that. So, one of the things that Dave has really brought up was about the idea that this was an important year to remind us of staying invested, being diversified, and then focus on those long-term goals.

You know if you look back at February and headed into March, we saw a sharp market decline, and then a big recovery out of that. For a lot of investors, that market decline was kind of a really trying time for them, when they said, “Am I going to stay invested or am I not?” And so, we stuck to our guns; we stayed invested. For most of our investors who did stay invested, they ended up having strong returns this year. But the other part of that, too, was staying diversified.

In part of that decline, we saw bonds really hold us up in the portfolio. And then coming out of that decline we saw those large cap stocks do really well. In the last quarter we saw small caps do really well. So, all parts of that portfolio performed in some role this year.

The other thing, too, that Dave reminded me of — it was a good year to check your risk tolerance. I know sometimes we have conversations with clients about, “Oh, you’re at 60/40, and what would it feel like to have a 30% market decline?” It’s kind of an abstract idea. “Well, what does that really mean? I don’t know what that would feel like.” This year we really did feel that.

So, it’s important to say, “Hey, am I at the right risk tolerance? Can I stay invested and be there for the long term to help achieve my goals?” I know that’s something you and Scott spent a lot of time talking about as well — the idea of the disconnect from what was happening in the economy with people’s jobs and so forth, and then what was happening to the stock market. So, I’d love to hear some of your perspectives on that.

Dave Hinde: Yeah, it was an odd year in that certain parts of the economy were pretty shut down. You know, you look at the travel industry, the airlines, hotels, restaurants. You know some of those types of restaurants were really shut down. People were losing jobs, and people were getting sick. It was just a really difficult time.

But then we saw kind of midsummer all of a sudden we saw equities came back and recovered, and it just seemed like there was this disconnect. When we looked into it a little further, what we really thought or found out was it was some of the stay-at-home stocks. If you look at Facebook, Amazon, Apple, Netflix, Google, and some of even the home improvement type companies, you look at Lowes and Home Depot — they really performed well. They were actually doing well, and that was kind of bolstering the stock market and the S&P 500. So, there was this disconnect, it seemed like for a while, between what was happening in our daily lives and the economy, and then how the stock market was performing. And I think that’s what we saw happening.

We had an election this year. That was obviously a big deal. Glad that’s behind us, and we’re all moving forward. But, just thought you might want to talk a little bit about the election. We fielded some calls from clients about how that might affect their portfolio. So, if you wouldn’t mind talking about that a little bit, that would be great.

Charles Hinde: Yeah, of course. You know I think that’s been a hot topic, obviously. It’s been a very polarizing year, with that in mind. But, when we look at what history has told us about the markets in relation to who ends up in the White House, it really hasn’t mattered. There’s not a really high correlation between whether there’s a democrat or a republican in the office. So, what really ends up mattering more is all these different areas of the economy. So, having those different sectors end up performing well. And that’s one of the things we focused a lot of our time on is — what’s going to recover? How’s it going to recover? And what’s that recovery going to look like. So, I’d love to kind of hear your perspective on what next year looks like and what we can maybe expect from the markets.

Dave Hinde: Yeah, we would all like to think that the calendar is going to flip over to 2021 and everything is going to be back to normal, and it’s all going to be good. We would love to think that the coronavirus would be gone, and parts of the economy would be back to normal. I don’t know that that’s going to happen, obviously.

I do think there’s some unknowns out there. If you look at the stimulus package — is that going to come through? Is that going to happen? We don’t know. Will these COVID vaccines really stem the tide from what we’re seeing as far as an increase in COVID infections right now? Obviously, we’re hoping that’s going to happen. But that might take a little while for that to play out and for some of these areas of the economy to recover.

Again, you start looking at travel and airlines and restaurants, and you want to see those areas of the economy recover. It might take a little bit of time to see all of that unwind for us in 2021. But we really think there is a lot of reason to have optimism. We see some area for growth, continued growth in areas of the economy. So, we’re cautiously optimistic that 2021 could be a good year for equities again.

Charles Hinde: Well, good. It’s great to hear that there’s some optimism about what next year looks like. I think we’re all realizing it’s going to be a choppy road to get there. I think the one last thing we’d love to talk about, too, is what next year looks like as far as our annual reviews. So, for all of you who are clients who are watching this, we’re going to be doing most of our annual reviews virtual — whether through a Zoom meeting or through a phone call. So, you’ll have someone reach out to you soon about scheduling that and kind of walking you through what that process looks like. We’ll make that as easy as possible for you.

But the other thing we’re really reminded of this year is just the importance of good, sound financial advice. You know, it’s been a rocky year, and the year we’re headed for it looks like is going to potentially be the same. If there’s anyone that you guys know in your network that would benefit from financial advice, from understanding where they’re at today and where they want to go, and for us to put a plan together for them, we’d love to have that conversation. Just give us a call or send us an email with their name, we’d love to reach out to them. From all of us here, we thank you for spending time listening to this, and we hope to see you soon.

Dave Hinde: Yeah, on behalf of the Heritage Investments team, for Dave Richmond and Scott Hinde, and then of course Deena and Kiersten that take such great care of all of our clients, we just want to say thank you for joining us. We hope you have a great holiday season, and here’s to a better 2021.