Monday Market Minute | Dec 28, 2020

2020 in review — private markets endured the ultimate stress test and emerged resilient

What Moved

The final Monday of 2020 offered a moment for reflection on a year that tested every assumption. The BoC cut from 1.75% to 0.25% in three weeks. The TSX crashed 35% and recovered fully. Housing went from frozen to frenzied. Mortgage deferrals peaked at 16% and declined to under 2%. Private credit loss rates stayed near historic lows. PE deal activity collapsed and recovered. VC set records. Crypto rallied 300%. Bitcoin closed the year near $29,000. Canadian housing prices rose 13% in a pandemic year. Private markets, by every measurable outcome, performed better than any stress model predicted.

Why It Matters

The 2020 experience provided live evidence for three enduring private market principles. First, illiquidity can protect investors from behavioral mistakes — those who held through the crisis avoided permanent loss. Second, diversification across private market sectors provides genuine resilience — the K-shaped recovery rewarded broad allocation. Third, the yield premium of private credit and MICs over traditional fixed income was validated as real and durable. As 2021 approached, private markets entered the new year with stronger conviction, record dry powder, and a post-pandemic deployment opportunity.

Signal to Watch

Watch for the pace of BoC normalization signals in 2021. The speed at which emergency measures were unwound would determine whether 2020's extraordinary conditions created lasting structural changes or a temporary anomaly.

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