If you put money into an S&P 500 index fund on January 1, 2020 and never looked at it, even through this roller coaster year, you might be surprised to find your dollars grew by about 15%.Even under normal circumstances, it’s an incredible return. But given the backdrop of 2020 — a pandemic, a recession and political turmoil — it’s even more incredible.”There’s still a lot on the horizon,” said Nick Wilwerding, a senior vice president at Omaha-based investment firm Bridges Trust.Wilwerding points to a Senate runoff election in Georgia where control of Congress hinges on the outcome, the first 100 days of a new presidential administration and a still-raging pandemic as wildcards for the market heading into the new year.The 2020 growth didn’t come in a straight line.As the pandemic shut down parts of the U.S. economy in March, there were losses so big that Wall Street exchanges halted trading several times.Over the course of four trading days, stocks plunged by 30%. They hit the bottom on March 23.”On March 24, the equities markets were up 9, 10% broadly in one day,” Wilwerding explained of the unprecedented volatility. “That’s a year’s worth of return. And if you reacted, or overreacted, and made an emotional decision, it can really limit your ability to meet those long-term goals.”And the team at Bridges Trust says investors need to be ready to ride more swings in the new year.”I think 2021 could be positive, but I think it could be very volatile,” said Ted Bridges, Bridges Trust chief executive.Global stock markets will end the year at a record valuation of more than $100 trillion. The relentless recovery was helped by quick action by central banks and government spending around the world.But more huge gains might not be a feature of 2021, Bridges warns.”Just the fact that stock prices have come pretty far, in a short amount of time, does discount a decent amount of the recovery that we think is still in front of us,” he said.Besides a massive intervention to stabilize the global economy, how else do stock watchers explain record market prices during a recession?”The stock market looks forward, and they’re not pricing in today’s earnings,” said Dan Walker, Bridges Trust senior analyst. “They’re pricing in earnings next year and the year after that.”The U.S. economy is on track to post huge numbers in 2021.”It could be two steps forward, one step back as we go through vaccination and normalization,” Walker explained. “But the general consensus is that economic growth is going to be very strong next year, somewhere in the order of 4 to 6%.”That means the U.S. economy could add $1 trillion to its GDP next year. It’s a big number, but still leaves the nation in the hole from pre-pandemic highs.Wilwerding sees social experiences as benefiting the most from pent-up demand after mass vaccination efforts. Seventy percent of U.S. economic…
Read More: Brace for continued market volatility in 2021, investment managers say