What a year 2020 has been for The RaeLipskie Partnership! From our professional and personal victories to experiencing a global health pandemic, 2020 has been a year like no other.

As we approach 2021, our team looks back on the year’s charitable giving, employee achievements, and how the stock market has been impacted by COVID-19 and the US presidential election.

Giving Back

RaeLipskie places great importance on giving back to our community and 2020 was no different.

The Food Bank of Waterloo Region is a charitable organization we have supported for many years. In August, our team sponsored and participated in the Food Bank’s Waffles in the Warehouse at Home and the “Why I Waffle” video. We also made a contribution to The Food Bank on behalf of Client Reception this past November.

St. Mary’s General Hospital Foundation is another charitable organization that our team has supported for a number of years. Also in August, our team sponsored and participated in the St. Mary’s Golf Tournament Doubles Open to support the Cardiac Care Centre at St. Mary’s General Hospital.


Throughout the year, our employees celebrated some incredible achievements. Laura King, Sarah Egan, Olivia Gwynne, Rebecca Jackson, and Alex Stoody all celebrated 5 years with RaeLipskie in 2020. Joe Banwait also joined our team as a Chief Compliance Officer in April. 

A huge congratulations went out to Heather Dewar for achieving her Chartered Investment Manager (CIM) designation this past June, and also becoming the 2020 recipient of the L.F. Gower Award! The award is presented annually to a RaeLipskie team member who embodies the high standards of Lloyd F. Gower. Lloyd served an integral role in the early development of our firm. His excellent client service, depth of knowledge in the investment industry, strong ethics, dedication to family, and volunteer involvement in the Waterloo Region continue to be core values for RaeLipskie. Heather’s phenomenal work in both the office and the community made her the perfect recipient for this award. Congratulations, Heather! 

Around The Office

In 2020, two of our employees were blessed with new gifts of life! Olivia Gwynne welcomed her first child Eloise in April, and Rebecca Jackson welcomed her second child Elijah in May. How precious are they! 

A (Crazy) Year in Review: Commentary from The RaeLipskie Team

COVID-19 and The Stock Market

The heady pace of equity market gains from 2019 carried over into early 2020 with North American markets posting multiple record highs into January. The so-called “Phase One” trade deal between China and the US set a positive tone for the markets. Bond investors however were already starting to sniff out a different concern emanating from China – something we initially called the coronavirus. Little did we know the impact it would have on our lives, the markets, economies and even politics. Certainly if someone had the prescience to foretell everything that would happen in 2020 in terms of the pandemic, the economic responses it engendered along with the fierce and divisive politicking that ensued, even that wise Seer would have been hard pressed to predict that equity markets would end the year back in the black (at least as of the time of writing).

Equity markets quickly sat up and paid attention once the COVID-19 virus (as it came to be known) started showing up outside of China, with our benchmark TSX Composite Index recording a roughly 35% decline before bottoming in late March. Governments around the world-initiated lock-down procedures that effectively brought economic activity to a standstill during those initial months. Overall GDP in Canada recorded an 8.2% decline in the first quarter – the kind of economic impact last witnessed during The Great Depression. The U.S. saw a 5% decline while the Eurozone was hit with a 14.2% decline in GDP. With lockdown requirements impacting just two weeks of March, but all of April, which of course falls into the second quarter, GDP fell off a cliff in the second quarter, with Canada’s 2Q20 GDP down a shocking 38.7% at an annualized rate.

By the end of the second quarter, conversely, the TSX had gained 17% in that three-month period, and a robust 40% from the March 23 lows. This “V-shaped” recovery (in the markets at least if not in the economy), left many observers scratching their head – how could the stock market be so bullish when the news relating to the pandemic and the economic devastation caused by the lock-downs was so bearish? Not to grossly oversimplify the issue, but one of those perspectives was looking backwards in time, while the other was looking forwards in time. While this next point is admittedly much easier to present now with the passage of some time, but if there ever was a recession where the cause and the eventual “cure” was clearly evident, this was it. As the easing of lockdown constraints continued, real progress in the economic recovery was evident. The Citigroup Economic Surprise Index, which measures the differential between expected and actual economic data flow, reached heights not seen in the history of that index. That’s not to say that the economic data was great necessarily, but it certainly was notably better than the expectations.

Within this rally from the Bear Market lows, returns by sector were hugely disparate. At one point the difference in year-to-date return between the best (Info Tech) and worst (Energy) sectors was 100%. Sectors that were expected to be beneficiaries of the Covid economy rallied, while the more economically sensitive sectors tended to lag. As an “enabler” of online shopping, Spotify, for example, saw strong growth in both sales and their stock price (with those buyers happily turning a blind eye to the stock’s egregious valuation levels), while worries about potential loan losses and record low interest rates kept the Bank stocks in check. In the U.S. market, the only two major sectors with positive year-over-year earnings growth – Info Tech and Healthcare – were also the two best performing sectors in the market – not a coincidence it seems.

The US Presidential Election and The Stock Market

As summer moved towards fall, another major variable – the U.S. Presidential election – increasingly was on investors’ minds. Although the 2016 election should have thoroughly disabused us of the efficacy of pre-election polls, most commentators were on-board with the solid lead in the polls being enjoyed by Joe Biden. Markets were initially somewhat perturbed by that expected outcome, as investors pointed to the perception that a Democrat in the White House is negative for the markets. As the election got closer, investors became a little more comfortable with that expected outcome, as it was believed that Biden would put forward a substantially larger short-term COVID-19 support program than Trump was likely to. In the near term at least, that was seen as a favourable outcome for the U.S. economy, and therefore the markets. Post-election day, as the results started to be tabulated, a third possible scenario emerged – political gridlock – where a Democrat-controlled White House was held in check by a Republican-controlled Senate. This is perceived as the most favourable outcome by equity investors, as it effectively stymies a newly elected President from veering sharply “left” or “right” as the case may be.

Looking forward, we return our focus, as always, to the underlying economic fundamentals. While the COVID recession will certainly leave scars on the economy, with unemployment and increased debt levels being two of the more significant ongoing concerns, it’s worth remembering where we are in the economic cycle and that is in the recovery phase. Although further constraints in response to surging rates of infection are troublesome and exact a very real human toll, the proverbial “light at the end of the tunnel” is also quite visible. Impressive progress on highly effective vaccines has been evident on several fronts. In the broad economy, manufacturers are carrying very lean inventory levels which would typically provide a boost to growth. Consumers would appear to have dry powder available and certainty have pent up demand after months of restrictions. Valuation levels for stocks appear to be a hurdle but in the context of record low interest rates perhaps they aren’t as troublesome, and high valuations in the early stages of a recovery is par for the course. 

As things stand today, we are constructive on the outlook for the markets.

We’d like to thank all of our clients for an amazing year. We look forward to connecting with you in 2021!

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