What a crazy few months it has been! We hope you are well and have all settled into your new fall schedules during these very strange times.
We have also returned to the office on a rotating schedule. We are taking every precaution and implementing all the safety protocols recommended by the government. I think we did a great job as a team during the first lockdown, communicating well through Zoom and Microsoft Teams but it’s great to see people face to face again- even at 2 meters apart.
So now that the long-awaited U.S. presidential election has been called, and promising news of a COVID-19 vaccine has been announced- we are reminded of how keen we are for a sense of closure.
Come what may between the U.S. presidential election being called and the inauguration yet to occur, the results will undoubtedly be attention-grabbing and action-packed. Social media and the popular press will see to that, as they feed on – and are fed by – our fascination over breaking news.
To counter all the excitement, I want to offer three calming insights:
- Cause and effect are rarely as direct as we might hope or fear.
As the election plays out, pundits will be proclaiming they can predict how the markets will respond to new socioeconomic policies coming out of a new administration. At least in terms of tomorrow’s market prices, they do not know. They cannot know. There are simply far too many interacting interests to make the call.
- It’s much easier to explain an outcome than to predict it.
Scientists have detailed models for explaining why volcanoes occur. But they still cannot predict each eruption. The same can be said for financial markets. We have excellent models for explaining a market’s overall factors and forces. But our ability to predict its individual events or specific moves remains as elusive as ever.
- Elections come and go. Your investments last a lifetime.
As voters, we have the opportunity to select a new leader every few years. As investors, we are best served by measuring the balance of power in our portfolio across decades rather than years. We have included an excellent piece from Dimensional Fund Advisors in this Newsletter that demonstrates the fact that for nearly 100 years of US presidential terms data shows a consistent upward march for US equities regardless of the administration in place.
In other words, politics aside, your best chance for achieving your personal financial goals remains the same: Continue to give your investments ample time and space to benefit from the market forces just described. As we move forward together, we hope you continue living according to your values, but heed this valuable advice about your lifetime investments. Stay the course!Sonny & Glenn