These last few months have been crazy between COVID-19, the shut down of the economy, a pending election, civil unrest, and the impact on the financial markets. Emotions have been at a peak and require us all to slow down and rely upon our values and our personal and financial disciplines.
As these events began to converge the markets began to lose their ability to look forward and anticipate due to the great unknowns. The result was that interest rates dropped by up to 80% on the 10-year treasury, unemployment rose to over 20%, and the S&P 500 dropped over 30% in weeks. The government infused trillions of dollars to prop up the economy in the US and around the world. Then things began to turn. Since late March interest rates on the 10 year Treasury have risen, stocks in the S&P 500 have risen to within 3% of their highs and unemployment is dropping (although still at record levels).
As your Financial Advisors we have employed solid disciplines of financial planning and investing in an attempt to manage business risk, market risk, and interest rate risk by diversifying you among different assets classes and into different investment securities. This diversification and the subsequent balance and re-balancing are disciplines rooted in solid financial planning principles and designed to support your unique situation. It is critical that we continue to communicate and practice these disciplines as we face uncertainty in the future.
My nieces are National Mountain Biking Champions. I asked them once if they were scared racing down the mountain. They said absolutely. They also said that by relying on solid fundamentals of good riding and not over steering as they raced down the hill, they could rely upon the balance and momentum to guide them. They found calm in the fundamentals. To their point, let’s remained balanced, use solid fundamentals, and not over steer as we navigate the bumpy road ahead.
Thank you for your trust and confidence in us. We are here any time you want to talk. We will be in touch.
Thomas A. Endersbe, CFP®
CEO, Signature Wealth Management
As Tom mentions above, this year we are navigating many different challenges. For a long time we have valued the capital markets team at JP Morgan Asset Management for their ability to help make sense of the data and the state of the global economy. In the video below, David Kelly walks through some of the key items their team finds most relevant to focus on at this time.
Click here to see their analysis
The November election is fast approaching and will be an ever-increasing topic of conversation. As we all try to read the tea leaves, the following chart from Federated Hermes can help provide some context for what the landscape has looked like in past re-election bids and how it may have contributed to the outcomes in those elections.