In this month’s video market update, Mary Ann discusses the election results and what they may mean.
November Stock Market Update Transcript
Hello, I’m Mary Ann Drucker, here with our video market update for November 2020. Well, voters have spoken, and a majority felt that a change was needed with Joe Biden succeeding Donald Trump as president. Interestingly, voters didn’t want too much change as it appears that Republicans will maintain control in the Senate and even picked up a few seats in the House of Representatives. The results shouldn’t be too unexpected as years with recessions, even self-inflicted versions, or years with unusual stresses on the economy, such as a pandemic, generally lead to a change in leadership.
Of course, Trump has vowed to take the fight to court as his administration is claiming voter fraud in several of the key battleground states. Given the unprecedented year we have all experienced, it seems only fitting that the election results would remain under a cloud. The year 2020 will in no doubt live on in infamy for many reasons. Heading into the election, the portfolios were positioned to participate if the knee jerk reaction were to the upside, while at the same time, provide a cushion with cash or an inverse position if the reaction had been to the downside.
With stocks surprising almost everyone by rallying strongly in the first week of November, we have begun to bring the portfolios back to more fully invested positions as shown in this table. Stocks continue to turn back and forth since the S&P 500 reached a high on September 2nd, but until stocks can make a sustained break above that level, we consider them to remain in a so-called landing, looking for a catalyst that will either send them to new highs or back down into a correction. In spite of the strong start to the month of November, there remain many challenges ahead for the economy and the stock and bond markets. So we will continue to monitor the FSA safety nets and be sure to keep the portfolios in sync with primary market trends.
For those who believe that one political party or another has a better influence on the stock market, we will leave you with some positive evidence, no matter which political party ended up in the White House. This graph from Invesco demonstrates that stock market performance is not dependent on which political party is in power. Historically, equities have performed well under both Democratic and Republican administrations.
Finally, on a separate topic, we want to take this opportunity to remind you of something that happens every year around this time. Mutual funds pay out capital gain distributions in November and December. Now some of you might recall this annual ritual from years past, but we wanted to bring it up in case you notice one or more of your funds drop in value more than you’d expect on a given day. Those drops will be adjusted by Schwab in the ensuing days as the distributions are reinvested.
In closing, we want to wish you and your families a wonderful and safe Thanksgiving holiday. And we’re grateful for the trust that you continue to place in us.
Until next time, thank you for watching.
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