Message from Jon
We were expecting the markets to waver and grow weary as the end of July neared since logically, we were closing in on Earnings, Stimulus, Coronavirus Spreading and the resulting reversal of openings.
Instead, we have seen the markets march forward at a less choppy pace but still inching upward as the month went on. The growing divorce from reality is beginning to breed FOMO once again as investors get tired of waiting on the proverbial retesting of the bottom or even a correction of any significance that fails to show.
What if this time in history is different than the last 160 years? Whenever the markets show a bear market decline coupled with an economic shock, we should see a retesting of the lows in our opinion, but maybe this time is different.
In speaking with a client of ours this week who I know follows covid-19 data daily, he shared an interesting hypothesis. It was his opinion that we may likely see a small reprieve from the outbreak we are currently experiencing and then in Late Sept or Oct we may see a severe spike due to schools opening and students being in close proximity to one another. This may lead to a morale collapse and a market decline on top of the burden of the Election, which may end up being different due to the balloting transitioning from lines and in person to mail and by proxy. We all saw what happened with the Hanging Chads incident in Florida and what kind of disruption to normalcy that had...imagine that on a national scale.1 This, of course, is pure opinion and speculation that could be accurate or inaccurate but, in my opinion, held some possibility.
So what if this time, instead of the End of July being the speculative area for a retest, we thought, it is different from history and comes in Oct or Nov? This is exactly why predicting the future never works and why timing the markets is also a fool's errand.
Stick to your goals and your plan to achieve those goals. Whether you are up this period or down the next, what matters is your long-term plan.
I think at times we can become focused on the moment and forget the day or the week or the month and most certainly the year. We will remember the BIG story of 2020, but in 5 years or 10, this too will fade from high definition to shadow of an image in our minds, but our goals and what we are doing to achieve them will still be chugging along!
Till we speak again, enjoy the nice weather and beautiful lawns!
Stocks Have Mixed Reaction
WEEKLY UPDATE - AUGUST 3, 2020
The Week on Wall StreetStocks were mixed last week amid a busy week of earnings, some troubling economic data, and seemingly little progress on a new fiscal stimulus package.
The Dow Jones Industrial Average slipped 0.16%, while the Standard & Poor's 500 increased by 1.73%. The Nasdaq Composite Index surged 3.69% for the week. The MSCI EAFE Index, which tracks developed stock markets overseas, dipped 0.75%.