Message from Jon
At present, our decision to delay our rebalance due to changing sentiment and rising concerns over who will become elected and what will ensue as a result has proved to be in line with the declining sentiment in the markets. With the VIX well above 20, the anticipated amount of volatility increase is not disappointing.1
Our expectation at this point in time is that a Biden win appears to be in the cards, but we will not really know for sure until well after the election day passes, especially with the mail in balloting. We believe that there is a rising possibility that the markets might assume with a Biden victory comes a hefty stimulus package and therefore a delayed decline in the markets, the earnings of companies and a recession. We are still unsure of how his tax plan will be acted upon by the general investing public or if it will be overshadowed by any stimulus speculation.
Before you go quoting us on the above scenario, if you understand forecasting, you also understand that the important phrase in this is "rising possibility" which implies that there could still be alternative scenarios that surface and end up manifesting.
Until we know for certain (and we all know by now how much uncertainty causes indigestion on Wall Street) we must be very flexible in the approach and deployment of investment capital or risk rapid deterioration of it, and for that matter, rapid expansion of it.
When we know more, you will know more.
Till we speak again, enjoy-or should I say-tolerate the crazy for a few more weeks!
A Difficult Week for Stocks
WEEKLY UPDATE - OCTOBER 19, 2020
The Week on Wall StreetStocks treaded water last week amid fading prospects for a stimulus bill, fears of a second wave of COVID-19 cases, and increasing political and regulatory pressures on Big Tech companies. The Dow Jones Industrial Average added just 0.07% while the Standard & Poor's 500 eked out a gain of 0.19%. The Nasdaq Composite index picked up 0.79% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, slid 2.08%.