What's going on?

As governments and central banks scrambled to manage their economies, investors were just scrambling to place a wager on record-breaking global stock and bond markets.

What does this mean?

Global stocks had a scare when Covid-19 first hit, falling more than 20% from their previous high into a �bear market�. But they bounced back with a vengeance when tech stocks � which account for roughly a quarter of the US stock market � got a boost from pandemic-driven trends like remote working and online shopping. By the end of the year, Chinese stocks were up roughly 25% and US stocks were up 15% � while tellingly, Europe�s less tech-heavy markets were down 5%.


Bonds had a good year too: their prices climbed and yields dropped as central banks bought them up in their droves. So much so, in fact, that a record $18 trillion of government and corporate bonds offered negative yields by the end of the year. In other words, investors wanted them even though they were guaranteed to lose them money�

Why should I care?

For markets: Whose high is it anyway?

No sooner have investors digested today�s goings-on than they try to put a price on next year�s potential, which might partly explain stock markets� recent record highs. 2021, after all, should be ripe for a dramatic bounce back: analysts are expecting average US company profits to grow by 22% � which, if proved right, would be the highest profit growth on record since 2010 (tweet this).

The bigger picture: The big rotation.

There was a lot of debate this year around when cheap-looking �value� stocks � in bruised sectors like cars, energy, and banking � would overtake �growth� stocks like those of Big Tech. And the widespread rollout of the vaccine could be that �when�: it�s already given investors more confidence in a growth rebound next year, which has historically been most beneficial to economically sensitive value stocks.