OCTOBER 12 - 16 MIDWEEK UPDATE
October 14, 2020 - Whether politics, pandemic, or presidential election, divisiveness and uncertainty abound in our country today. You may be wondering how current events and future outcomes will affect your investments. At HighGround, we wish to give you peace of mind by stewarding well what you have entrusted to us and by resourcing you with the information and guidance you need to advance your mission.
- Investor sentiment remains optimistic as early quarterly corporate earnings results are mixed. Goldman Sachs is reporting impressive results while other U.S. banks missed revenue projections for the third quarter.
- Investors are watching out for any signs of progress on additional U.S. economic stimulus, but it is unlikely that an agreed-upon stimulus package will be passed before the election.
- Unemployment claims have been above 800,000 every week since the World Health Organization declared the coronavirus a pandemic in March.
- With recent spikes in coronavirus cases coinciding with big drug companies halting vaccine trials, many investors are focused on how and when to prepare for a post-vaccine world. A Covid-19 vaccine may be a better indicator of market recovery than the U.S. election results.
Will the Presidential Election Affect the Stock Market?
Historically, the stock market is more volatile in the months leading up to an election. This is no surprise, given that the markets hate uncertainty. For investors, it’s important to put political feelings aside and objectively assess the situation. Rather than worrying about what might happen under the possible election outcomes, consider focusing your energy on aspects of your financial situation that you can control, like how diversified you are against volatility in the markets.
We believe better-diversified portfolios have greater potential for long-term growth. Spreading investments into different equity and fixed income markets, while also investing in non-traditional alternative asset classes, is the best defense for softening market volatility. Return streams of well-diversified strategies are expected to be less volatile because performance correlations among individual asset classes tend to vary with one another. In other words, when one asset class “zigs,” others “zag,” tempering volatility and, importantly, protecting asset value when capital markets experience dramatic downdrafts. If you have a question regarding your investments, please reach out and allow us to serve you.
In these weeks leading up to the presidential election, let us remember the two greatest commandments: to love the Lord with all your heart, soul, and mind and to love your neighbor as yourself. While the nation chooses her leaders, may we, as individuals, also choose to love.