Twelve months ago, we were still in the longest economic expansion in U.S. history. Unemployment sat near historic lows, wages and income continued to strengthen, and inflation readings remained stable. Then, COVID gained a foothold on our shores. The human impact has been harrowing, with the nation on pace to lose more citizens to the pandemic than the 405,000 American souls lost in World War II. The public health response to the pandemic, imploring social distancing and mandating partial or complete lockdowns, worked initially to drive down infections and “flatten the curve.” However, these steps precipitated a severe economic crisis analogous to a natural disaster, as supply, demand, and financial shocks struck in unison. Individuals have lost livelihoods and businesses, and the burden has fallen most harshly on those least able to bear the losses.
Economic and Capital Markets Commentary
Market leadership maintained in the growth and momentum camp for the year, but cyclical and value names outperformed during the fourth quarter. The change in leadership for the quarter resulted principally from an outperformance during November. Despite the optimism brought by the successful development of vaccines, COVID infection rates in many countries continued to increase during the quarter. As economic activity indicators declined during the quarter, we expect to see sequentially weaker economic data from the fourth quarter. Our outlook continues to contemplate activity returning towards pre-COVID levels as the current year progresses with monetary and fiscal stimulus promoting further economic expansion into the latter part of 2021 and 2022.
TWST: Please give us a snapshot of Luther King Capital Management, a bit about the company’s history and business today.
Mr. King: Luther King Capital Management was founded in 1979 by Luther King, after he had served for nearly a decade at Lionel D. Edie. He stepped out on his own to establish a firm here in Texas. The initial clients were from the Fort Worth and Dallas area. The requests from initial clients were for him to establish a firm based in Fort Worth and to focus on the investment research as opposed to marketing.