“Alone, we can do so little; together, we can do so much” Helen Keller

Good morning,

We’ve been preparing all year…… I’m not actually talking about the arrival of Santa, but I’m actually still not quite ready for Jolly Old Saint Nicholas just yet I am referring to the second wave we’ve been anticipating, that seems to be here just in time for the holidays.

Typical weekend for 2020, it’s been a weekend of news headlines…..Europe locking down, our local communities here going into the Grey Zone and a finally announced $900 billion stimulus package from Congress – we are in for another wild week, the Dow is looking to open in the red, remember ….there is always opportunity amid uncertainty.

“I alone cannot change the world, but I can cast a stone across the waters to create many ripples.” Mother Teresa

Let’s continue to visit the four elements of Wealth….we have covered Intellectual Capital and Human Capital, today we look at the meaning and importance of our Social Capital. What better year for us to reflect on how important our relationship are than this year of 2020.

Social Capital – how do we ensure we are creating true generational wealth? The answer, as many experts in the field have posited, may lie in something quite intangible…the idea of social capital. First defined by author Lyda Hanifan in 1916 as “those tangible assets count for most in the daily lives of people: namely goodwill, fellowship, sympathy and social intercourse among the individuals and families who make up a social unit...” social capital is built from the well of deep trust and shared values that can be unique to our relationships and how you and your family connects to the larger world. Our relationships with friends, colleagues and community all make up strength on your balance sheet and properly harnessing the social capital takes a high degree of collaboration, dialogue and interaction. As important as this social capital is to our balance sheet, it’s often taken for granted and overlooked and we must always remember to take time to reflect on how important these connections our to our own growth and our family wealth.

As we head into the Holiday Season, remember that we are able to find strength in those around us, we are surrounded by those that care for us and help us along our own unique journey.

"You can have everything in life you want if you will just help enough other people get what they want" Zig Ziglar

And now, to the markets……..

Until this morning, global equity markets have been calm and still remain near their highs as we close in on the holiday season and the end of a tumultuous 2020. As we head into the week (hopefully most of you are on holiday) we provide an update on the coronavirus, which continues to present a challenge across wide swaths of the world. Also below I’ve included a little outlook for 2021 and conclude with reflections and learnings from the year that was.

Coronavirus

The second wave of the coronavirus is proving to be much more difficult to contain than the first. There may be a myriad of reasons – the cooler seasons in the northern hemisphere, a potentially more infectious virus, and overall “virus fatigue” that has led to people letting their guards down. At current levels, nearly 650,000 new people around the world are getting infected every day.

Canada has seen progress over the past week with a meaningful moderation in the rate of new infection growth. In fact, the new infection rate hardly changed, with the country’s 7-day moving average of new daily infections sitting near 6,650, versus the 6500 from the prior week. Some provinces saw meaningful declines in new infection growth: Saskatchewan, Alberta, and Manitoba. Meanwhile, the East Coast and British Columbia were relatively stable. Ontario and Quebec unfortunately have experienced a pickup in the growth rate of new infections. As a result, both provinces are exploring additional restrictive measures in light of the rising pressures facing the health care systems.

After a few weeks of apparent progress, Europe experienced a setback over the past week. Germany’s situation has deteriorated and it has entered a more restrictive lockdown. The Netherlands has followed a similar path. Meanwhile, France and the United Kingdom, which had been improving, saw a pick-up in new infections recently, leading the latter to adopt more restrictive measures in some parts of the country. With some countries temporarily easing their measures over the upcoming Christmas holiday, the infection trends may worsen over the near - term. Meanwhile, the U.S. is averaging over 200,000 new daily infections. The country’s spread remains broad-based, but the state of California has emerged as a hot spot with well over 30,000 new infections every day. Large portions of the state are under lockdown but it has yet to have had an impact on infection trends.

Elsewhere, countries across the world ranging from Russia, to Japan, South Korea, South Africa, and Brazil are all facing rising trends of new infection growth, illustrating the global nature of this crisis.

Thoughts for 2021

We expect 2021 to be a tale of two halves. In the early going, the virus will continue to remain a headwind to economic and earnings growth, as it has for much of this past year. As vaccines become more widely available in the developed world into the spring and summer months, we expect a gradual return to more normal levels of activity, setting the stage for a more durable economic trajectory by the end of the year. Low interest rates and aid from governments around the world, including an additional round from the U.S., should help bridge the economic gap that will exist through this period.

Interestingly, the hit to the global economy from this second wave has not been as negative as expected despite the renewed restrictions across Europe, Canada, and parts of the United States. Recent data from Europe indicates activity – both manufacturing and services – has been more resilient despite recent headwinds. Commentary from both the Bank of Canada and the Federal Reserve officials of late has suggested the respective economies have been a bit stronger than anticipated, although they acknowledged the elevated risk and disparity that exists among different parts of the economy.

In sum, the backdrop of a very low interest rate environment, significant government aid that may extend further, and a more durable economic recovery should help drive meaningful earnings growth. The challenge for investors is that markets are forward looking in nature, and already reflect much of the projected path that we foresee. As a result, while we are constructive on global stocks given improving trends, our level of enthusiasm is relatively modest, very well positioned to withstand near term volatility and benefit from eventual recovery.

Reflections on 2020

This was an unusual year in so many ways, with concerns spanning personal health, safety, job and business security, and financial risk. Yet, lessons from past crises served to be useful with respect to the management of our client investment portfolios. More specifically, our ability to navigate the volatility in the beginning of the year was a reflection of our active management, shifting asset allocation to benefit from the investment climate. In addition, maintaining a level of discipline to control one’s emotions and look past the short-term. Lastly, being prepared to be proactive, identifying opportunities that arise when markets reach extreme levels of pessimism and optimism helped ensure that all of you were protected on the downside and benefited from positive performance over the year. A seemingly long but successful year.

On a final note, we want to wish you and your family a healthy and safe holiday season.

Hopefully you have some holiday reading to keep you leaning and growing through the season! We look forward to a new year that we expect to bring an eventual and much welcome return back to normal.

“Take pride in how far you've come. Have faith in how far you can go. But don't forget to enjoy the journey.” Michael Josephson

Be well & enjoy the moments

Derek