Hamlin equity accounts increased 15.00% during the fourth quarter. The S&P 500 advanced 12.15% for the quarter, celebrating better than expected COVID vaccine efficacy rates and the resolution of a contentious presidential election. Hamlin bond accounts increased in value despite a 24-basis point back-up in the 10-year Treasury yield to 0.93% over the last three months of 2020. In an effort to shorten this quarterly letter, we are publishing our 2021 Stock Market Outlook independently.
Hamlin’s equity accounts increased approximately 4.80% over the last three months as the stock market climbed steadily through mid-September to an all-time high. Investors anticipated a post-COVID re-opening boost to earnings and record- setting global monetary stimulus pushed PE multiples to levels not seen since 2000. Hamlin’s high-yield tax exempt bond account values advanced in line with the broader high yield municipal bond market as 10-year U.S. Treasury bond yields dropped approximately 5 basis points.
Hamlin equity accounts increased significantly over the last three months as the S&P 500 had its strongest quarter since 1998, gaining 20.54%. Monetary and fiscal stimulus calmed credit and labor markets, and the global spread of coronavirus showed signs of containment. Our municipal bond portfolios increased in value, benefiting from lower rates and Fed-induced spread compression.
We are returning to a “question and answer” format for the summer-time newsletter. We have tried to answer the questions posed most frequently by our clients and business partners over the last few months.
Hamlin equity accounts declined 25.70% over the last three months. The stock market fell at an unprecedented rate as Coronavirus containment efforts brought much of the global economy to a standstill. The Hamlin Bond Composite declined 3.62% as wider municipal bond spreads more than offset consistent coupon income. The speed and magnitude of the stock market’s collapse, eclipsed those of past bear markets. The sharp increase in exchange traded fund ( “ETF ”) ownership and ubiquity of smartphones may have intensified retail investor response to virus-driven predictions of economic disaster. Quarantined in front of emotional CNBC anchors and guests, nervous investors found it historically easy to raise cash.