Investing in 2020 was unlike anything we've ever seen.
If we could sum up the year in just 10 quotes to get a sense of what an absolute rollercoaster it was, I think these would do the job well:
1."What would it be like if your biggest holding lost half of its value in just a couple of days?"
– David Gardner, Motley Fool co-founder, 15 January 2020
This is the question asked by Motley Fool co-founder, co-chairman and Chief Rule Breaker David Gardner in January in an episode of the Motley Fool Rule Breaker podcast. The episode simulated that very scenario – a significant market crash. David Gardner and guest host Chris Hill discussed a number of big US listed companies as if they had suffered significant share price falls.
The timing seemed prophetic, however Gardner was careful to note at the start of the episode that "by no means are we predicting or thinking that the market is going to drop any time soon".
2. "Hell is coming"
– Bill Ackman, Pershing Square Capital Management CEO, 18 March 2020
As the COVID-19 virus spread rapidly, share markets started plummeting. By March, even seasoned investors like Bill Ackman, CEO of Pershing Square Capital Management were fearing the worst. Ackman spoke live to CNBC in an emotional interview and issued a stark warning that "a depression era period" could be on its way. As he spoke on 18 March, the big S&P 500 index was plunging as much as -7%. Pershing Square went on to make more than US$2.5 billion in bets against markets.
3. "Australia is closing its borders to all non-citizens and non-residents"
– Prime Minister Scott Morrison, 19 March 2020
To slow the spread of coronavirus and to save lives, the doors to the boarder were slammed shut in March. Airlines were shuttered. Airports turned to ghost towns. The closure of borders around the world will be a defining event of 2020. We may never see it again in our lives.
4. "Tesla stock price is too high imo"
– Elon Musk, Telsa CEO, 2 May 2020
Tesla stock price is too high imo
Elon Musk (@elonmusk) May 1, 2020
As share markets started to roar back to life, the Tesla (NASDAQ:TSLA) share price went sky-ward. At the time of CEO Elon Musk's tweet the Tesla share price sat at around US$140. Since then the Tesla share price has rocketed by more than 350%, to US$640 per share.
5. "When something like the current pandemic happens, it's hard to factor that in. That's why you never want to use borrowed money, at least in my view, into investments"
– Warren Buffett, Berkshire Hathaway CEO, 2 May 2020
At the same time as Musk's tweet, iconic investor Warren Buffett offered some sage investing advice during Berkshire Hathaway's virtual shareholder's meeting.
6. "The fundamental outlook may be positive on balance, but with listed security prices where they are, the odds aren't in investors favor"
– Howard Marks, Oaktree Capital CEO, 18 June 2020
In his June memo 'The Anatomy of a Rally', Oaktree Capital's Howard Marks reiterated the thoughts of many of us as share markets bounced back. The S&P/ASX 200 Index (ASX: XJO) had gained around +32% from its March 23 low. Since then share markets have continued to rise merrily, proving Marks' long held maximum that 'You cannot predict. You can prepare'.
7. "Today is a great day for science and humanity"
– Dr. Albert Bourla – Pfizer Chairman and CEO, 9 November 2020
The world cheered as Pfizer and BioNTech announced a vaccine candidate had proved more than 90% effective against the scourge of COVID-19. People can do incredible things when time and resources are brought to a focus.
8. "If you look at what's transpiring in the current pandemic, similar to what we saw in the 2008 financial crisis, there's this distinct shift away from credit to debit"
– Nick Molnar, Afterpay co-founder, 7 December 2020
The Afterpay Ltd (ASX: APT) share price has had one of the most incredible runs of the year as shoppers moved online. After falling as low as $8 per share in March the Afterpay share price rose over 1,100% to $114 per share in December.
9. "You can't live a successful life without doing some difficult things that go wrong. That's just the nature of the game"
– Charlie Munger, vice chairman of Berkshire Hathaway, 14 December 2020
If you made some investing mistakes in 2020 don't beat yourself up, it was a testing year. As Charlie Munger noted in this webcast interview with California Institute of Technology getting things wrong and learning from it is part of investing.
10. "We are playing the only game that counts; the long-game"
– David Gardner, 15 Jan 2020
To come full circle on 2020 I want to finish with another quote from David Gardner from his January podcast. In so many ways 2020 was a complete shocker. But more than anything it showed why it is so important to keep a long-term view of investing. Markets regularly rise and fall without warning. Having the fortitude to ride out the drops and letting returns compound over many years will likely see you come out a winner.
