Elections, Markets, and Reality

I wish I knew who would win the election! We could just end all of this one day earlier (or weeks earlier, who knows) and we could all go back to loving our neighbors instead of hating them because of their lawn sign. Regardless of outcome we have hit a new reality and that is one of high emotions, ignoring data, and sticking to talking points we’ve been fed by the media. This isn’t about who wins or who loses, its about digging your heels in so deep that you are unwilling to see reality, specifically when it comes to your financial plan and the markets.

Is it 2018?

Take a look at the chart below, it shows the Dow Jones Industrial Average on January 29th, 2018. It is just about 4% lower than it is today, and that is nearly a full 3 years ago. As time has gone on the stock market has been used as a measuring stick for success with Presidents.

dow jones industrial average chart

In that same period of time the S&P500 us up a little more than 15%. There a number of reasons for this.

  • S&P is 500 companies not just 30, so better diversified
  • S&P500 is market cap weighted so largest company by market cap move the index
  • Dow is price weighted, so the price of the stock is directly related to the impact it has on the index.

Which is a better indication of how the market has done?

Reality

I would venture a guess to say that the Dow is a better indication of reality at the moment than the S&P500. Even though the S&P is 500 stocks, it is disproportionately impacted by the FAANG stocks, which many of you own, but hopefully not at the concentrated levels like they are in the index.

As we are all wrapped up in the elections, and rightfully so, let’s not allow our emotions of the outcome dictate our financial plan. Over the past week I have had countless conversations with clients, friends, and family asking what they should do in anticipation of the elections, depending on who they think will win, and who they want to win.

As I pointed out in my October 12th Monday Market Update, it doesn’t matter who wins! Click on the link and check out the charts from my October 12th piece for real, factual, proof that it does not matter who wins for your portfolio.

It’s almost over

As a tumultuous election season is coming to an end, let’s remember that our neighbor whose lawn sign we dislike was there for us when we had an emergency and needed someone to watch the kids, or borrow a cup of sugar, or rush to your house because they heard your smoke detectors going off. It’s okay to be passionate but who you are as a person isn’t dictated by who you vote for.

So What?

So how does this impact all of you?

  • Who you are isn’t dictated by who you vote for
  • Same goes for your neighbor
  • It’s almost over, just hang in there

Stock market calendar this week:

Tuesday November 3rd, 2020
Election Day
Thursday November 5th, 2020
Initial and Continuing Jobless Claims @ 8:30AM
Friday November 6th, 2020
Non-Farm Payrolls for October @ 8:30AM

Most anticipated earnings for this weekmost anticipated earnings chart november 2

Latest Covid-19 Data

latest covid data chart apr 1 - nov 1

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