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Reflections on 2020 Presidential Race & Stock Market

September 02, 2020
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The presidential election will be upon us in two months. Investors are analyzing possible November outcomes. Based on the past election history (no guarantee), outcomes on the stock market annual rates of return suggest the market does best with a Democrat in the White House and either a Republican controlled or divided control of Congress. This last happened from 2011 to 2015 and about 10% of the time since 1900.

For quantitative data check on Internet sources such as “fivethirtyeight.com.” In our opinion, the race is too close to call now which suggest some market stability until the election results are known – key point, do not panic. We go through this every four years. Our views on the economic recovery and the market is a positive one because of the broad-based strong Leading Economic Index (LIE) figures and the Fed indicating it is not concerned about current inflation. 

Difficult policy disagreements are delaying progress on the added fiscal relief package. However, it is expected to emerge this month and should focus on such areas as: federal unemployment insurance, payments to individuals and small businesses, and for schools, post office, and healthcare, plus liability protection for businesses.

In general, it is believed, investors have moved past 2020 earnings and are focusing on proving outlook in 2021 and 2022. Market has performed well due to the forward-looking mindset of investors and their willingness to discount future earnings improvements as the nation eventually moves beyond the grip of COVID-19. Investors appear to be enthusiastically celebrating progress on vaccines and therapeutics. We continue to believe and remain invested and continue to recommend a dollar-cost-average approach to additions to our holdings. For the 35 years Pat has been doing this professionally and over 50 years personally, experience shows the main issue is getting in the market at the right time.  Reminder: IT'S TIME IN THE MARKET, NOT TIMING!

 

This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. The information is based on data gathered from what we believe are reliable sources. It is not guaranteed by Waddell & Reed, Inc. as to the accuracy and is not intended to be used as the basis for any investment decisions. Please consult your financial advisor before making financial decisions. Past performance is not a guarantee of future results.  (09/20)