See No Evil - October 30, 2020
As we last discussed, the election will have its own perverse entertainment value (tragedy and comedy, depending on your life outlook). I dare say it hasn’t disappointed us on that front thus far. At the same time, I suspect we all share the deep desire to have it over with. By November 4th we normally would expect a definitive result and from then on we mere mortals would leave all the ‘big stuff’ to our newly elected officials. But alas, that may not be the case this year. It’ll be entertaining either way to watch the next few weeks unfold.
As of this writing we have just four days to go to our heralded election day. The markets, as I mentioned last time, have shrugged off a truly miserable year and have remained delightfully tame. While we have seen a near term sell-off this last week due to the recent increases in COVID cases nationally, overall the Dow Jones and other indicators have held up remarkably well in 2020. Going into the election and beyond, we appear to still have a light zephyr of a breeze at our back. If Mr. Trump pulls out a win, Wall Street could continue to expect a course of deregulation and taxes to remain stable. Investors generally like that. On the contrary, if Mr. Biden crosses the finish line first, as most of the polls currently predict, the investment mavens appear to be comfortable with the likely large infrastructure and spending bills that should boost the economy into the New Year. So, it appears we may have a Goldilocks election ahead for our monies: not too hot, not too cold (Assuming our top bureaucrats deliver on the long promised vaccine). Let’s continue to hope so, given we all continue to need to find good news wherever we can in 2020.
Now that I’ve given you the ice cream, permit me to melt away some of that optimism. Ultimately, we believe there are headwinds in the distance. I will define “distance” as several years into the future. The federal government spending continues to grow with abandon. Some will say it’s because of the pandemic, and that is true. However to ignore the fact that democratic and republican lawmakers are spending at unprecedented rates this millennia, would be to collectively ignore a slow moving train crash. At some point, likely not in 2021, but perhaps in the next several years, the grim reaper could demand payment for these loose purse strings. Debt could eat our economy alive should interest rates start to rise again.
Thus the proverbial two-edged sword. For the foreseeable months and perhaps several years ahead, we’ll ‘feel’ pretty good about the economy’s changes: delivering growth with the attendant benefit potentially accruing to our investments. However, if our elected officials continue to dupe themselves into believing that we can spend unabashedly in the hopes of creating long term prosperity, there could be an ugly day of reckoning.
For now, it may be prudent to garnish any potential gains and see if any opportunities are available in the year ahead. Rest assured, Duncan-Newman Associates will be watching for signs of the debt debacles approach, and YES, we believe there are numerous strategies we can employ in preparation for the eventuality to prepare you when the time comes.
For now, enjoy the show. Wear your masks. And look forward to a happier year ahead.
Robert Duncan, CFP®
30300 Agoura Road. Suite 280
Agoura Hills, CA 91301
Bradley L. Newman
Masters in Financial Planning
Managing Director, Branch Manager
PIM Portfolio Manager
Zachary Breverman, CFP®
Executive Vice President
Senior Registered Account Administrator
Senior Registered Account Administrator
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