I attempt to think about money as a relationship in my life and I think it’s beneficial to question whether or not that relationship is healthy. Though money is merely a piece of paper, it derives its’ value from societies universal agreement, a social contract acknowledged by most, that the right quantity can purchase anything we perceive as valuable. This can be as simple as a bagel or chair, but eventually the mind shifts from purchasing items of value to wondering if money can buy experiences of value commensurate with happiness. If the proper utility of money is to buy me food when I’m hungry, it’s natural to ask the question, is it possible that money has the ability to purchase any sensation I value, regardless of whether it’s my desire in one moment to have a full belly or in another moment to have a full heart?
As we exited 2020, investors looked forward to turning the page on the health and economic impacts of the pandemic, the political upheaval of a contentious election cycle, and the unprecedented volatile swings across markets. The first quarter of 2021 initially greeted investors with more of the same.
Over the last nine decades, Value investors have been rewarded for the approach, as the “Value premium” has been positive on average. However, it has not been immune to periods of underperformance, and investors have recently experienced a long and discouraging period of pronounced underperformance, causing many to question if the strategy is still relevant.
At the end of the fourth quarter, it is customary to look back to ascertain the various events and economic inputs that might help us understand and contextualize the ebb and flow of markets for both the quarter and the year. 2020, however, is a year unlike any most of us have endured.
We are three quarters into 2020, and the experience thus far has been akin to riding a pendulum, swinging from insurmountable obstacles on the road to imminent disaster to a world full of positive change, hope, and possibility.
