Market Update: Oct 08 2020
- Presidential Election
- Tech Stocks
Here is a recap of our live Q&A session held on 10/08/20 presented by Joe Randazzo JD, CFP® from FNA Wealth Management and Dave Stone CPA, CFP® from Tartan Wealth Management.
Details for our next session, October 22nd, can be found here.
Since the debate and President Trump’s coronavirus diagnosis, Joe Biden seems to be ahead in the polls. How do you see this impacting the markets?
First and foremost, we strongly discourage making investment decisions today based on possible election outcomes. We’re reading more and more commentary that suggests the markets have already priced in a good amount of uncertainty around the election, so making moves now based on what you think could happen may very well backfire. I have not noticed a correlation between polling numbers and market performance, and I don’t think there will be a significant impact and I believe rather firmly that, regardless of the outcome, we will see increased volatility.
All that said, institutional investors may be much more focused on earnings and economic data then on the election at is point. Paying closer attention to how the economic recovery continues to play out, what earnings look like, and whether a second round of stimulus is passed are all more important factors than the election at this point.
Given the pullback in technology the last several weeks, are you suggesting anything different now?
I am not. If you were late investing in growth or technology, consider staying the course and maybe even add to positions. If you’ve ridden the growth ride the last six months, you are likely still way ahead of the game even after the September pullback.
Dollar cost averaging has worked very well for us the last few months, and I recommend that strategy and I plan to do so through the end of the year and then reassess. Also, as we’ve mentioned over the last few months, a rebalance may be appropriate at this stage. Value stocks have shown some resilience over the last month and we are starting to see more and more commentary on a potential breakout for value.
So, nothing different than we’ve said before – we’re still looking at systematic investing and periodic rebalancing in a market like this.
The views and opinions expressed herein are those of the author(s) noted and may or may not represent the views of Beacon Financial Advisory or Lincoln Investment. The material presented is provided for informational purposes only. Nothing contained herein should be construed as a recommendation to buy or sell any securities. Past performance is no guarantee of future results. No person or system can predict the market. All investments are subject to risk, including the risk of principal loss. Asset allocation does not guarantee a profit or protect against loss.
A plan of regular investing does not assure a profit or protect against loss in a declining market. You should consider your financial ability to continue your purchases over an extended period of time.
The goal of value funds is to find proverbial diamonds in the rough; that is, companies whose stock prices don’t necessarily reflect their fundamental worth. In searching for these companies, managers look for what many experts call a "margin of safety." This means that the market has discounted a security more than it should have and that its market value, the price at which it is trading, is less than its intrinsic value, the present value of its future cash flows. In general, value funds focus on perceived safety rather than growth, often investing in mature companies that are primarily using their earnings to pay dividends.