Market Update: Oct 22 2020
- Market Expectations
- Presidential Election
- Tech Companies
Here is a recap of our live Q&A session held on 10/22/20 presented by Joe Randazzo JD, CFP® from FNA Wealth Management and Dave Stone CPA, CFP® from Tartan Wealth Management.
Details for our next session, 11/5/20, can be found here.
We haven’t seen much direction one way or the other in the market, what do you expect between now and the election, and then into the end of the year?
Well, certainly, we expect volatility up until and probably through the election. If investors hate anything, it is uncertainty. In the last couple of weeks, we have seen an increase in coronavirus cases, a nomination of a Supreme Court justice, A lawsuit initiated against Google’s parent company, and all of that in the midst of earnings season. There’s a lot of noise surrounding the markets and it’s hard to focus on fundamentals, and we believe that contributes to continued volatility.
Once the election is over, we hope that some of the uncertainty is taken out of the equation. However, you’ve heard us say many times, don’t manage your investments based on potential election outcomes. Rather, be prepared to re-balance on the backside. While it’s hard to see the benefit of rebalancing and dollar cost averaging day to day or week to week, the benefits may have been significant over the last couple months.
As for what we expect between the election and the end of the year - not much different. I am of the opinion that market momentum to close out the year will depend in large part on retail numbers and coronavirus cases. If we can stop this climb of reported cases, I think that gives us a little boost. Retail numbers likely depend on another stimulus package, but will be important nonetheless. We mentioned several weeks ago that it’s unlikely we will see stimulus passed before the election, but if something is done by year end I think that provides another boost. All that said, let me reiterate our long-standing position to not micromanage accounts based on what we expect next week or next month. The longer-term trend may very well be in favor of equities, just perhaps not the same areas we’ve seen perform well since the pandemic began. Hence the need to look at re-balancing.
How do you think the governments lawsuit against Google‘s parent company will impact their stock or other mega tech companies?
It certainly hasn’t derailed the performance of Google this week, up a couple percent from the beginning of the week (as of 3:00 Wednesday). In fact, history has shown us that, if the government is in fact successful in its efforts, the pieces and parts may very well perform better post break up then they do as a whole before. We saw that way back when AT&T was broken up in 1984 and an investment in all the residual companies took off. I would not make short term investment decisions based on the government’s recent filing of a lawsuit or their apparent desire to do the same with other big tech companies.
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