2020 brought us a global pandemic, the fastest recorded bull and bear markets, a flood into the capital markets of new investors and companies, and a spike in the search for some new and legacy financial terms.
At Investopedia each year, we look back at the most popular financial terms that captured the attention of our readers throughout the year. With more than 22 million monthly readers and more than 30,000 articles on our website, we can see an accurate picture of the most important topics and terms in 2020. Over the past 12 months, our data science team identified which subjects had the most significant influx of visitors and broke down their interest month-by-month in the following chart.
2020 Terms of the Year
Average Percent Increase from Baseline by Month
|Term||March – December||Peak Increase||When it Peaked|
|+6,726%||Thu Jul. 30th|
|Special Purpose Acquisition Company (SPAC)||
|+1,021%||Wed Jul. 22nd|
|+117%||Sat Apr. 18th|
|+741%||Sat Nov. 7th|
|+5,824%||Wed Jun. 24th|
|+1,096%||Sat Mar. 21st|
|Cboe Volatility Index (VIX) Definition||
|+868%||Mon Mar. 23rd|
|+1,273%||Tue Mar. 24th|
|+1,326%||Tue Mar. 31st|
|What Is Forbearance?||
|+4,591%||Mon Mar. 30th|
|+57,518%||Sat Mar. 28th|
1. Stimulus Check
The concept of a stimulus check is not new, but as COVID-19 swept across the world, crippling economic growth, it took on a new life. In response to the crisis, governments and central banks around the world have implemented sweeping and substantial fiscal and monetary stimulus measures to counteract the virus-induced disruption.
The stimulus payments in the U.S. were part of the CARES Act, a larger package of federal stimulus to support the economy. Congress passed trillions of dollars in fiscal programs, while the Federal Reserve’s monetary stimulus added trillions of dollars. The Federal Reserve extended the duration of its lending programs on July 28, 2020, which would end on Sept. 30, so that they are now scheduled to end on Dec. 31, 2020.
2. Stock Split
We can thank Apple and Tesla for this term’s surge in interest. Apple on Aug. 28 enacted a 4-for-1 stock split, while Tesla on Aug. 31 enacted a 5-for-1 stock split. Companies sometimes choose to split their shares so that they can lower their stock’s trading price to a range considered comfortable by most investors and increase the shares’ liquidity. Tesla has been welcomed to join the S&P 500 Index since the split and saw its share price rise 43 percent.
The political philosophy of Karl Marx is a return visitor to our top term list and given the contentious political climate here in the U.S. and in Europe, that should come as no surprise. In late June, interest in Marxism started, coinciding with political upheaval as cities across the United States protested police brutality.
Unfortunately, forbearance, or the temporary postponement of mortgage payments, has become a common term because people struggle to make payments because of the financial burden caused by the pandemic. The housing market saw a K-shaped recovery as new homes were bought by higher-income earners, while lower-income earners were not sure if they could pay the rent or mortgage next month. According to Black Knight, Inc., more than 2.3 million homeowners have delinquent mortgages that remain due 90 or more days before, but not in foreclosure. That’s five times more than the number seen the year before. In addition, 4 million homeowners refinanced their mortgages in 2020 through the third quarter, with volumes of refinancing originations exceeding $2 trillion.22 trillion.
5. Severance Pay
Unfortunately, this was also very common in the first few months of the pandemic, as 23 million Americans lost their jobs. Severance pay was a lifeline until pandemic unemployment insurance was included as part of the CARES Act for many of those individuals and their households.
6. Margin Call
The crashes of 2009 and 1999 echoed those two terrifying words, as the pandemic was in its early days and stock markets plunged into the fastest bear market in history. A margin call is typically an indicator that the value of one or more of the securities held in the margin account of an investor has dropped. The investor must choose to either deposit more money in the account or sell some of the assets held in the account when a margin call occurs. As stocks plunged in March, many unfortunate investors were likely forced to pay up in order to satisfy their margin debt.
Notably, as the stock market was coming off a strong 2019, margin debt was increasing before the pandemic. It plunged as the pandemic set in and is once again climbing sky-high.
7. Black Swan
The coronavirus pandemic has been considered by some to be a black swan, a term coined to refer to unpredictable events that are beyond what is usually expected of a situation and have potentially serious consequences. The events of the Black Swan are characterized by their extreme rarity, severe effect, and the widespread insistence that they were evident in retrospect. Nassim Nicholas Taleb, however, the man who popularized the term, said the pandemic was not a true black swan because it was entirely predictable.3 In addition, compared to historical pandemics, it is not an outlier.
8. Special Objective Acquisition Company (SPAC)
The year 2020 was really the year of SPAC. In 2020, these blank-check companies were busy scooping up companies like DraftKings and Nikola in the cannabis, green technology, and sports-betting arenas. There is a common theme of high growth potential, large losses, and buzzy trends.
In 2020, SPACs raised a record $20 billion, a five-fold increase from the record high of last year, which was up 44 percent from 2018 alone. The 206 SPAC IPOs completed this year, according to Goldman Sachs, account for 52 percent of the record $124 billion of the total U.S. IPO capital has been raised through 356 transactions year-to-date.
9. Cboe Volatility Index (VIX)
No wonder this term made the top 10 list, given how volatile the markets have been since the pandemic began. The VIX is a real-time market index that reflects the expectation of the market for forward-looking volatility for 30 days. It provides a measure of market risk and investor feelings derived from the price inputs of S&P 500 index options. Other names, such as the “Fear Gauge” or “Fear Index.” are also known.
As markets tumbled and fears of the intensifying pandemic and its dire human and economic consequences reached a boiling point, we saw a massive spike in the VIX in March. Markets started a historic rebound and recovery in late March, which brought the VIX back down, but not down to pre-pandemic levels. We saw another spike in June (though much lower than in March), and again around the time of the election.
Socialism, the close cousin of Marxism, is always a popular term on our website, but it got a workout in 2020 because of the White House race. It surged when Bernie Sanders was a viable candidate and it surged again as President Trump accused Vice President Biden during the presidential debates of pushing a socialist agenda. Interest in this term spiked, especially through Election Day, as polls widened leading up to the election.
As lawmakers around the world consider whether the “capitalist experiment” has worked, socialism has become a hotly debated topic in politics. Themes like Universal Basic Income, Medicare for All, and the elimination of student loans have been promoted by Democratic politicians in the U.S. Conservative opponents may brand these ideas as socialist, but when he wrote Das Kapital in 1867, his seminal treatise on the underpinnings of the capitalist system and the risks it brings with it, Marx probably did not have these topics in mind.
Honorable Mention: IRA Roth
People have been given a reason to think about retirement savings and rainy day funds by the economic turmoil resulting from the coronavirus pandemic. Roth IRAs are individual retirement accounts (IRAs) that, provided certain conditions are met, allow qualified withdrawals on a tax-free basis. According to a survey by the Transamerica Center for Retirement Studies, in 2020, more than a quarter of workers have taken or plan to take out a loan or withdraw from their retirement accounts due to the pandemic. In addition, to maximize their tax benefits, as many individuals have lost their income or a significant part of it, they may have chosen to convert their existing IRA account to a Roth IRA.