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Our job isn’t to declare winners and losers – it is to study the most likely outcome given new, relevant data and to understand how financial markets may react. At this stage, it appears as though financial markets are betting-on an outcome of divided-government, meaning that Joe Biden will remain the President-Elect, Republicans will keep the majority in the Senate, and the Democrats will maintain the House after losing a number of seats.
The beginning of November is a time that I have been focused-on with anticipation and excitement on a professional level. On November 3rd, Americans will cast their ballots – if they haven’t already – in an election that will set the course of our country over the next four years and beyond. This is also the time of year that Destiny Capital’s Investment Committee accumulates and studies data from many of the finest financial research institutions in the world as we conduct our annual Capital Market Assumption review process.
The beauty of investing is that we can prepare even for the surprises and storms we do not know to watch for. We prepare by remaining disciplined and consistent in our investing approach. By ensuring that portfolios stay diversified so that no single storm can sink all ships.
Attempting to comprehend some of the stock market behavior we've witnessed in recent weeks and months is a lot like trying to understand the behavior of subatomic particles in quantum mechanics....
In one of our frequent group discussions, I recently asked Destiny Capital’s wealth strategists and financial planners what questions and concerns they are hearing from their clients most often these days. To my surprise, the answer wasn’t COVID – it was concern about the November election. Therefore, it was suggested that someone publicly articulate our firm’s general thoughts on this subject – and all digital eyes turned to me despite my best efforts to slink below my desk and out of eyeshot of my Zoom webcam.
In late May, over 5.8 million viewers tuned-in to watch Tiger Woods, Peyton Manning, Phil Mickelson, and Tom Brady play a sloppy round of golf in the midst of a torrential downpour. Highlights of the match – to many viewers, anyway – included Tom Brady splitting his pants, commentator Charles Barkley’s incisive trolling, and Phil Mickelson’s chiseled calves. Given the record viewership for this event, I think it’s safe to say that Americans are a bit starved for competitive, live sports. As such, I thought I’d begin this month’s market & economy recap by using a sports metaphor to dissect and explain what we’ve experienced in financial markets in recent weeks.
Our path has been long and punishing, and it may feel disheartening that we haven’t yet reached ‘Peak COVID’ when considering either total global cases or full economic impact. The summit seems near, but we still have a laborious path ahead, particularly when considering both the loss of life and the release of future economic & earnings data.
As the pandemic crisis continues to persist, I’ve sensed an evolving spectrum of emotions from friends, family and co-workers in recent days and weeks. In fact, I’m finding that some of these emotions often overlap with the commonly known ‘five stages of grief’ that many people experience when dealing with loss or hardship.
As we are now 60 days into our new world after this Moment of Common Recognition we wanted to highlight some of the ways our world has changed and which of those are likely to be permanent.
We actively identify and implement tactical opportunities to better position client portfolios, yet – as Chess GrandMaster Garry Kasparov recommends – we remain true to who we are as investors and asset managers. This allows us to maintain incredibly strong conviction in our thesis, process, asset selections, and tactical decisions.
Recent days have been fascinating – strictly economically speaking – as we are finally starting to see earnings reports and other economic indicators that begin to reflect the realities of the COVID-19 pandemic. In short – report cards are finally starting to arrive, and investors are beginning to get a strong dose of reality. Therefore, we’ll start our weekly commentary with a very basic report card of some of the data that has emerged in recent days.
One topic that has gotten lost in the shuffle of the COVID-19 crisis is what’s been happening with the world’s largest commodity – oil. Since early March, crude oil prices have plummeted and, this week, U.S. crude oil futures contracts for May delivery dipped sharply into negative territory.