Wesley's Rant: Buckle Up!

Monday, October 19, 2020

If you are an investor and have been invested in the U.S. stock and bond market during 2020, you have had the pleasure of participating in a historic, precedent-breaking time. The pandemic of COVID-19 has shaken our world, causing disruptions in healthcare and impacting every type of business operation.  These business disruptions include retail, manufacturing, travel, tourism, and restaurants.  Every sector of our economy has been affected.  You may have heard an old rule that investment markets do not like surprises.  When 2020 started, investors had been enjoying an 11-year-long bull market.  When the stock market crashed during March, its descent was fast, furious, and record-setting.

Before the pandemic, the S & P 500 index hit an all-time high on February 19, 2020.  By March 23rd, the index had dropped 34% from its high.[1]  Then a rally started in the equity markets, and by September’s end, the index had gained 44.7% from its low point.[2]  This is all history but wait; we still have the entire 4th quarter of 2020 ahead of us!  I am reminded of most amusement park rides when the recorded voice instructs you to keep your hands inside the moving vehicle and all times and to buckle up.

Uncertainty makes investors nervous and the next couple of months has plenty of that.  The elections and outcomes are certainly on investors' minds; the question of when we will get a vaccine and will it be safe is certainly on investors' minds. We have had huge gains in many technology stocks in 2020.  The question of whether technology stocks are in a bubble is on investors' minds.  Are our schools safe?  How do we get everyone back to work?  Many unanswered questions certainly should lead an investor to expect more volatility in this quarter.

On a historical basis, the 4th quarter has produced positive returns in the equity markets.[3]  On a historical basis, the equity markets have advanced after presidential elections.[4]  If you have not heard, this is not your ordinary election year.  States authorizing mail-in ballots, the President having COVID, the former vice president spending most of his time in his home, and the possibility of delaying in knowing who the winner will be is all front and center.  As 2020 has demonstrated, investing can be as unpredictable as a rollercoaster ride.

History has taught all investors, including the professional investors, that attempts to time the markets ultimately result in underperformance.

In my conversations, many individuals have become frozen.  Some investors moved to cash during the March sell-off. Many who are in cash are waiting until the election is over, many who stayed invested and participated in the rally are planning on getting out just before the election.  If you are an investor who does not work with a financial professional, you are probably just worn out mentally worrying about all the noise we have had in 2020 and what lies ahead.  If you are working with an investment professional, I hope you have been able to speak with him or her once or twice in the last few months.  If you are trying to figure this out on your own or have not spoken with your advisor, our firm has been helping investors for over 60 years. We are here to help.  Think about making the “Wiser” move today.

[1] The S & P 500 Index is generally considered representative of the U.S. stock market.  You can not directly invest in the index

[2] FactSet

[3] Yardeni.com, Standard & Poors, and Haver Analytics

[4] Nordea and Macrobond

Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Wiser Financial Group is not affiliated with Kestra IS or Kestra AS.

The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra Investment Services, LLC, or Kestra Advisory Services, LLC. This is for general information only and is not intended to provide specific investment advice or recommendations for any individual. It is suggested that you consult your financial professional, attorney, or tax advisor about your individual situation. Comments concerning the past performance are not intended to be forward-looking and should not be viewed as an indication of future results.


Wesley Lentz Wesley Lentz

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