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10/28/20 Market Commentary

October 28, 2020 | Articles

Don’t Panic During A Pandemic
Now is not the time to panic or run and hide from the volatility that comes with investing.  

Some commentary on today’s sell off in the broader markets. At this point, the S&P 500 Index is down -3.0% on the day. When you parse the data and information around this market movement, there does not seem to be any corresponding major ‘new’ news events. However, there continues to be four major ongoing events, each experiencing some increased turmoil or uncertainty. First, and most importantly, COVID-19 cases worldwide and in the U.S. seem to be spiking (the death rate is falling). The resulting concern of the financial markets is that global economies will impose harsher shut down/lock down rules and thereby slow any recession recovery underway. Second, the U.S. Presidential election is only six days away and the polls are getting tighter with some continued concerns that the outcome may not be determined on Election Day. Recall, the 2000 election (Bush v Gore) and the outcome was settled months later. Third, the recession is clearly turning around and estimates for tomorrow’s U.S. 3Q YOY GDP number are an astounding +32%. At the same time, corporate news releases continue to be mixed. For example, Microsoft warned of a potential slowing in growth and Boeing announced 7,000 job cuts. Lastly, social unrest and protesting does not want to abate with the latest flare up in Philadelphia, PA. Of course, the election outcome could weigh heavily on a need for national calm.

We have spoken about each of the above unknowns for several months now, yet they continue to plague the markets week after week. It is not new information, but nothing is getting worked out nor concluding – and that is the bigger issue. It is sometimes difficult to remain calm during market swings, but history has shown us that wild market timing does not work. The better plan is to think long term, stick to your financial plan and speak with your advisor.