20/20 Vision

It’s safe to say we’re not sad to see the back of 2020. Looking back over this year, it has (amongst other things), been a blur; Zoom quizzes replaced nights at the pub, the S&P 500 (US stock market) dropped by 34% in 33 days only to achieve a new all-time high less than 6 months later and a vaccine for a completely new virus has been made available within about a year of the pandemic beginning. If we had tried to put together a vision of 2020, we might have been able to predict market volatility at some point. But there are no glasses, contact lenses or laser treatment that could have allowed anyone to anticipate the cruel loss of life inflicted by the virus or the effect it would have on such a broad range of industries.

Over the year, we have, however, become certain of one thing - the power of human ingenuity and compassion is very much alive and well and almost certainly advancing exponentially. The roll-out of various vaccines is one example but we have also been astounded by the efforts of so many others: The frontline NHS workers, the brainpower and commitment invested by medical and scientific professionals, the businesses that have pivoted from their wonderfully structured business plans to accommodate an unprecedented threat, the teachers and early years specialists delivering education, mindfulness and security to our children and the givers who have made time to help those most affected through job losses and health concerns.

But in some sense, there is nothing overwhelmingly surprising. Over the last year we have seen the human ability to create, innovate and advance. On that basis alone, history repeats itself as we have always recovered from one threat to the next.

If 20/20 vision includes a prediction of what might occur in the next 12 months, then we'll probably need glasses. But, when we realise that investing, sensibly, in the companies of the world actually means investing in the future creativity, resilience and talent of the people in the world, it can only make sense to wait for the storm to pass. Over time, the human ability to create will exceed the tendency to destroy, the desire to care will overcome the potential to inflict suffering and our ability to innovate and deliver when our backs are up against the wall will repeat. That is the 20/20 vision and clarity with which all long-term investors should approach their plans.

Faith LiversedgeDecember 21, 2020