Markets continued their recovery during the 3rd quarter of 2020. As has been the case consistently over the last three years - the delta between mega cap technology names and everything else widened further.
States have prescribed inconsistent criteria for shut downs which has produced wide variations in economic recovery and conditions in each state. This has only added to the energy around the upcoming presidential election - which I anticipate will not only be closer than media pundits expect but engender some very strong negative (hopefully not violent) reactions from the loser and their supporters.
Investing in Turbulent Times
We live in unique times. Billboards, radio hosts, political pundits and social media users all observe that there is something different about 2020. I for one hope the "uniqueness" ends this year...
In a far from exhaustive list of what unique events have occurred this year alone: 1) the senate failed to convict Donald Trump after his impeachment in the house, 2) Covid-19 wreaked political, economic and social havoc across the entire world, 3) social unrest and race tensions generated riots throughout the country, 4) record numbers of fires and hurricanes as well as devastation from them, 5) financial markets had record quick moves down and then up again in the first half of the year, 6) an already intense campaign season has been thrown into further chaos by the death of a supreme court justice and the likelihood for a significant change in the court's political center, and finally
6) goodwill for fellow citizens has declined as social media has provided a forum to accuse and argue from the anonymity of dark cubicles as opposed to past generations' discussing while looking into neighbors' or co-workers' eyes.
And the reality is: It COULD get worse before it gets better...
I have always believed that part of my job as a financial advisor is to differentiate between "probable" and "possible" and to plan for the probable while preparing for the possible.
In that light I'd like to suggest the following as a prudent path during these exceptionally unique and turbulent times:
1) Put the majority of your investable assets in stocks and bonds. These are the most consistent way of reaching financial goals and achieving security over long periods of time. This is your "Plan for the Probable".
2) Take a 5-10% portion of your assets and prepare for emergencies and worst-case scenarios. A cash buffer, as well as food and water storage and sources of fuel and a means to cook will be invaluable if the possible but unlikely occurs. Precious metals and non-paper currency can not only protect against potential inflation spikes but also be a financial buffer in worst-case scenarios. Emotionally write these emergency protection measures off as "insurance". This is your "Preparation for the Possible".
I believe practical and prudent investing and preparation can make it easier to sleep at night and more likely to be successful whatever the short-term and long-term future have in store.
And another thing: Be kind. Give your neighbors and co-workers and those you don't know and perhaps don't agree with the benefit of the doubt as we navigate what has been and will likely be a turbulent couple of months as we finish 2020 and head into 2021...