The 3rd quarter marched on in continuation of the rally that started March 23rd.
For the quarter, the S&P 500 index was up about 8%, even after the month of September that saw a decline of approximately 4%. Year to date the index is up approximately, 4%. It is important to note that a very large portion of the gains in the indexes since the market low, have been concentrated in a handful of growth stocks. Many stocks still remain negative for the year; in particular many of the value-dividend paying stocks.
The economy continues to recover all be it off of very depressed levels. It is possible that the recovery’s pace will begin to slow as we move through the end of 2020 and into 2021. This would not be surprising to us as in any recovery the quickest part is typically in the beginning stages. We do need to be diligent as we are not out of the woods by any means. Any resurgence of the virus can easily cause additional economic disruptions. Also, continuing high unemployment and the seemingly never-ending tensions with China could cap or slow a recovery.
The main event in the 4th quarter to almost no one’s surprise will be the election. We probably field at least a couple questions daily on this topic. Predicting the outcome of an election is incredibly difficult and predicting the markets reaction to a particular election result may be even more difficult. The only words of caution that come to mind are from one of our favorite market mavens Sir John Templeton.
One of his most famous sayings was “The four most dangerous words in investing are this time it’s different.” We will just need to let this event that is out of our control play out.
Hence, we will not be making specific changes to model portfolios based on possible election outcomes. We prefer to stay diligent on topics that are more factual in nature like economic data and market technical which at the present time are both trending in a good direction.
Please keep in mind that there is bound to be some increased volatility in the next few weeks and months. This is not terribly uncommon around any election. If you feel you would like your specific situation addressed, please reach out to us as soon as possible to do so.
Lastly, once we finally get an election result (and it is possible that this will take more time than usual) it will be easier to make and suggest changes.
Both sides have distinctly different tax and economic agendas which are bound to have market impacts over the next 4 years that will need to be evaluated. As always, feel free to reach out should you have any question or need to talk things out. Happy to revisit plans as needed.
If you have questions, need our help or know someone else who might benefit from what we do, please send us a note.
Stay healthy and safe,
Rockport Wealth Advisors