LGT's Profit Sense

We are quickly approaching yet another market-moving event this year, but unlike the unprecedented coronavirus, the 2020 Presidential election has been on the calendar for years. The year began with an unforeseen worldwide pandemic that continues to wreak havoc on all aspects of life, and subsequently threw the investing markets into brief turmoil.

The 2020 Presidential election, on the other hand, will hopefully spur a national revitalization for the outlook of the next four years.

We have seen both candidates and their running mates spar (for lack of a better term) on television and starkly contrasting opinions put on display, now the next 20 days shifts to the citizens to take action by voting for their preferred candidate. How the outcome of the election will directly impact the individual investor is still unknown, but the outcome for those that stick to a well-rounded financial plan will surely end up better off than those without.

The end of the federal fiscal year saw markets sell off slightly then rebound late, but the fourth quarter of this dramatic year could prove to be beneficial for the wealth-mindful investor.

Equity markets finished out the month of September on a rally that landed the S&P 500 Index at 3,363, and the growth continued into October with the index closing Wednesday the 14^th at 3,488 – up over 120 points in 10 trading days. The S&P 500 index is now positive 10.3% year to date, and the NASDAQ Composite index up 33.1% year to date.

The Fixed Income market has also continued a hot streak this year, with the Bloomberg Barclays US Aggregate Bond Index at 6.8% year to date. All of this positive news begs the question of “What next?”, which cannot be answered until we are in the thick of things trudging forward. Looking back on historic events can give a glimmer of hope, like how on October 13^th 2008 (just 12 years ago) the S&P 500 index rose 11.6%¹ in one single trading day. But that was then, and this is the new-normal in a pandemic-driven society.

The glimmer of hope is all but demolished when looking back at the 2017 Federal Reserve predictions for 2020 – the Fed Funds rate forecasted to be just shy of 3% and jobless rate at 4.2%. Today, in 2020, the Fed Funds rate sits at 0-0.25% and jobless rate is nearly double the prediction at 7.9%. A breath of fresh air might be in the near future, but at this point Americans are seemingly just holding their breaths for the results on November 3^rd.

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