What does the hand of fate hold?

Thinking about the year ahead I’m struck by the words of Richard Burns, chair of Aberdeen Standard Equity Income (ASEI), who recently wrote in the investment trust’s annual report that at the start of 2020, Covid-19 looked like ‘no more than a cloud as small as a man’s hand’, with the general assumption being coronavirus would prove no more damaging to the world economy than Sars had been in 2003. How ‘horribly misplaced’ that view was, Burns says.

Indeed, now we have perfect 2020 hindsight on the past 12 months, it seems incredible we were so complacent about the risk of a worldwide pandemic. Looking forward to 2021 then, the challenge is not to assume the path to recovery will be smooth, while avoiding the temptation to be too bearish after all the suffering and uncertainty.

Or to put it another way – on the one hand, amazing progress has been made in discovering Covid-19 vaccines so quickly, and the ability of many people to adapt to working remotely has been encouraging. On the other hand, unknown hazards will undoubtedly present themselves in the year ahead.

Contemplating our list of 20 surprises from 2020, and thinking about the recent resurgence of ‘value’ versus ‘growth’ and the momentum behind technology and Asia, it occurs to me that the ever-present problem for investors is to decide how the outlook will affect markets. Or as Alex Wright, fund manager of Fidelity Special Values (FSV), told an FT Money panel discussion: prospects for 2021 do look positive but a lot of that is in the price after the vaccine rally, so careful stock picking will be required if investors are not to over play their hand.