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Stu Kedwell, Co-Head of North American Equities, joins Dave to recap some key lessons investors can take away from 2020, including the importance of looking at all possible outcomes, and maintaining long-term optimism. [7 minutes, 25 seconds] (Recorded December 15, 2020)


Hello and welcome to The Download. I’m your host, Dave Richardson, and it’s (S)Tuesday — last (S)Tuesday of the year! So, we’re joined by Stu Kedwell, Co-Head of North American Equities at RBC Global Asset Management. Stu, season’s greetings!

Dave, thanks for having me. Season’s greetings to you as well. We were just joking about two weeks in our house before we start again.

So we’ll talk about that at the end of the podcast, in terms of the podcast taking a bit of a vacation. And like most individuals, the podcast isn’t going anywhere either. It’ll be hunkered down at home trying to stay safe from the virus. And that’s kind of been the year. Uneventful in terms of being able to do some of the things you would normally do, but a very eventful year from an investment perspective. So, Stu, what do you think are some of the key takeaways, whether we’re talking to you as a professional investment manager or for those of us who are investing on our own? What do you think some of the key learnings are from what we’ve seen in 2020?

Well, when we were sitting here this time last year, and we had a forecast for 2020, you couldn’t have been more embarrassed as a forecaster starting in early 2020. I don’t think that says one thing or the other about trying to make forecasts, but it means that you need to always be thinking just about anything could happen in a given period of time. And we were saying, if 2021 is wilder than 2020, that’ll be really quite something. So having a really open mind — and not that you would have envisioned anything really that came our way — but knowing that more things can happen than will happen is a pretty central tenet to a long-term successful investment career. The second thing is trying to remain optimistic on the long term. We’ve discussed this many times, whether or not it’s central bankers, government officials, company management -- there’s just an awful lot of horse power in the world trying to figure out how to get rid of roadblocks. How to fix problems, how to make things better down the road in the future, even though the near term can often be harder to reconcile. So those are probably things at the top of my list. Having a dedicated plan, never doing anything drastic to your investment portfolio in the midst of what was a fairly emotional year from a market standpoint. Layering in capital through the piece on the notion that the future will be better than the present, which is almost always been true, but not always visible. So those are some of the things. I don’t think you could have seen a year where the highs and lows of investor behavior being any wider. When we think back to late March, early April, and the selling that took place at that juncture, where part of it was due to some force selling around some illiquidity. That always takes place. But even after the rebound, the one thing I keep thinking in my head was that while I was prepared to not be as bearish as many in March and April, the other side of the coin is that in many respects, people became extremely bullish relative to what I might have expected. Always having in my head that the spectrum of bullishness and bearishness is often wider than I might expect. And that’s just part of being an investor over a very long period of time. There’s going to be ups and downs. And as I say, I think the future normally turns out a little bit better than everyone thinks at any given point in time.

I think we’ve learnt particularly from the last two corrections — the one at the tail end of 2018, and this one is —, as you talk about not getting too bearish and maybe looking for opportunities to be bullish when others are bearish, investing on those two dips, once the market’s down 20%, proves to be a pretty good strategy, almost always.

It’s astonishing, really, when you think about the long-term return potential of the market being mid-to-high-single or high-single digits. And when you get those rare opportunities where you get to buy it down 10, 15, 20% from that longer-term trend, it’s just a really good way to meet your long-term financial plan.

Think about it, say it was December 31st, 2019 and you had yourself a nicely diversified, balanced portfolio, with lots of different types of fixed income and the best quality holdings from all around the world, and you went out to your New Year’s Eve party and got so drunk that you passed out until today. You wake up, you don’t even know what’s happened. And maybe that just tells a story in and of itself, right?

One hundred percent. Time does the heavy lifting, and that’s something that we all have to remember.

Absolutely. Well, we did live through this. It was a tough year, we’re all hoping for a better 2021 on so many fronts. Stu I want to thank you for all the time you’ve given me on the podcast. But I think the biggest winners are our listeners. So thank you for showing up regularly on Stu’s days. You always have interesting things to share. So thank you for that.

Great. Thanks, Dave, and thanks to everyone who’s listened. I appreciate it very much.

And we’re going to take a couple of weeks off for the holidays. We’ll be back to take a good fresh look at 2021 when it happens. If you just started listening over the last few weeks or last couple of months, we’ve got about one hundred different podcasts taped. Nothing better when you’re locked down at home than sitting and going back and listening to about a year and a half of interesting podcasts here on the Download. And we’ve got personally invested with Stu, we go a little bit deeper into his background. But we wish you all, from all of us here on the Download, the very happiest of holidays and a happy New Year and best wishes to you and your loved ones for a healthy and happy 2021. Stu, thanks again. And hopefully we’ll see you all back in the New Year. Thank you.


Recorded: December 15, 2020

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