2020’s Word of the Year

So, its official! It shouldn’t be much of a surprise, but the Merriam-Webster word of the year for 2020 is…. “Pandemic”.

Apparently, there’s no need to even wait for December to conclude and perhaps it wasn’t a difficult call. Runner-ups were also associated with COVID 19 such as “Asymptomatic” (who knew… ok that’s a poor pun) and “Quarantine”. For sports fans, “Mamba” references sadly grew due to the passing of Kobe Bryant who was nicknamed “Black Mamba”. Winning words from the past include 2008’s “Bail Out”, 2010’s “Austerity” which followed the Great Recession.  2012 was an ultra-tight race with “Socialism” squeaking past “Capitalism” perhaps offering a glimpse of a future political divide and a growing interest shared by upcoming young voters.

Obviously, it’s nearly impossible to pick the “Word of the Year” in advance but break out your crystal balls because I’ll be darned if I don’t take a stab at it. Now, as students of the stock market we are ingrained to believe the stock market tends to be forward looking. So, let’s put our own twist on Merriam-Websters selection process by putting on our Amazing Kreskin glasses (for non-baby boomers this will require a Google reference) and un-mask our best guess for Withum Wealth’s 2021 word of the year: “Rotation”.

In 2020 there were a composite of 495 stocks in the S&P 500 index that were stuck in the mud and isolated from the 5 largest stocks that seem to be in perpetual party mode. In finance terms this is referred to as narrow breadth. Markets can become a concern or even destabilize when a minority of participants or a narrow theme garner all the attention and investor love and leave little interest in the majority. The tech-wreck of 2000 was an example of an imbalanced market that no vaccine or otherwise could have cured. Today’s leadership of large-cap tech giants are stable in that they have more predictable cashflows and debatably acceptable valuations, but nonetheless are seemingly well loved. We believe, over an investment cycle, institutional investors will gravitate their investment dollars in a manner that aims to maximize risk adjusted returns and in doing so, non mega cap stocks will be re-discovered as may other asset classes both home and abroad.

If a vaccine represents daylight at the end of a tunnel, we must therefore still be in a tunnel. 2021 will hopefully bring much needed fiscal stimulus, the further reengineering of business and associated additive cash flow, lower unemployment, greater confidence, greater consumer spending, a bump in global travel and we think an opportunity to participate in a market that exhibits a deepening and somewhat changing leadership board.

Now just for fun, if we had to really predict Merriam-Websters 2021 Word of the Year, we might guess “Vaccine” closely followed by “Travel” as having massive year over year search increases.

Hopefully we weren’t too word-y.

Important Disclosure: This email is limited to the dissemination of information pertaining to Withum Wealth Management (“Withum Wealth”) and general economic market conditions. Nothing contained herein should be construed as personalized advice, or an offer or solicitation to buy or sell any securities. Past performance is not indicative of future results, and there is no guarantee that the views and opinions expressed in this commentary will come to pass. Withum Wealth is neither a law firm nor an accounting firm, and no portion of this commentary should be construed as legal or tax advice. You are advised to consult with separate legal or tax advisors with respect to any legal or tax advice. Withum Wealth does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to WWM’s web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Withum Wealth is an investment adviser registered with the SEC. For information pertaining to the registration status of Withum Wealth, please refer to the Investment Adviser Public Disclosure website (www.adviserinfo.sec.gov). For additional information about Withum Wealth, including fees and services, send for our written disclosure statement as set forth on Form ADV Part 2A.