Economic Insights - September 2020

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What is the outlook for the economy?  We’ll give you the insights and analysis you need to make better decisions, so you can make better profits.

As we enter the 4th Quarter, it’s important to recognize that the stock market has withstood a major shock this year and responded far better than most analysts expected.

Even so, with all the “risks” being highlighted, volatility is likely to remain elevated.

As we see it, it’s likely that:

  • We’ll see favorable results from Phase III clinical trials of multiple COVID19 vaccines as early as the end of October;
  • The elections will be decided in a peaceful manner; and
  • Holiday shopping will be robust with limited disruption from COVID-19.

Some will say, “that’s a pipe dream.” They could be right.  We do know that all of those predictions are far from certain.  We could have no vaccine at all, the election results could be significantly delayed resulting in widespread violence, and the U.S could start to experience a second wave of COVID-19 similar to what has developed in some parts of Europe.

These are just a few examples of issues that could shape the trajectory of the equity markets in the short term. But, when it comes to emotion, our message here never changes: “Do not let emotions “take over,” because knee-jerk investment decisions dictated by sentiment inevitably result in subpar performance.”

If you need a specific example, just consider our 2020 COVID19 “experience.” 

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Anyone selling in March locked-in a 34 percent decline and missed out on the 55+ percent record-setting rally that followed.  In fact, as of September 25, our PARE-5 strategy was up nearly 85 percent from the March low. Of course, that is the “extreme” example, but rest assured, there are many variations of that backdrop all resulting in a painful financial experience. By the way, this isn’t “Monday morning quarterbacking”, it’s been our message since March. We conducted a Town Hall on March 22, when we explained why we were fully invested in stocks “for the new post-COVID economy.” That message was the result of paying attention to one and only one thing, the Long-Term trends from 30,000...

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