As Election Day evolved into an “election week” mired in confusion and controversy, on Saturday, the Associated Press declared Joe Biden the victor in Pennsylvania, pushing him over the 270 electoral votes needed to prevail. The Trump campaign has not conceded the election, and we will likely see political and legal actions in the days ahead, contributing to uncertainty in the investment markets. On a very positive note, markets around the world rose sharply today in response to reports regarding the effectiveness of a coronavirus vaccine under development. News agencies are reporting that a front-runner coronavirus vaccine developed by drug giant Pfizer and German biotechnology firm BioNTech was more than 90 percent effective at protecting people compared with a placebo saline shot.
From an investment perspective, while uncertainty could still drive volatility in markets in the coming weeks, in the short-run, effective management of the virus could be the most influential driver of the economy and markets. In the long run, market fundamentals and government policy will matter most for the economy and markets. From a policy perspective, a split government1 may temper the possibility of significant policy changes and the Federal Reserve may continue to be accommodative with lower interest rates for longer. In this environment, stocks continue to appear likely to outperform more conservative alternatives like bonds and cash equivalents.
There’s always the possibility we will experience market turbulence related to events out of our control. However, focusing on the facts can provide a degree of solace and stability. Facing a global pandemic which has wreaked havoc and hardship far and wide, our nation’s ingenuity and resourcefulness are bringing to bear vaccines and treatments within months of the first outbreaks. The speed of these positive developments has been faster than we could have imagined just months ago, and may prove very beneficial in bringing a level of calm to our personal lives and the investment markets.
To weather uncertainty and volatility, we continue to believe it’s well advised to keep portfolios properly diversified and proactively managed. One of our primary areas of focus has been, and continues to be, understanding current events that may impact the markets, and doing everything possible to ensure your financial plans and investment strategies provide you with the peace of mind that comes from knowing you are doing the best you can. Investors should also remember that in the long-run, markets have continued to rise, and the economy has continued to grow regardless of political configuration, current events and unprecedented drivers of short-term market volatility
In the midst of the uncertainty, we are experiencing today, let’s not lose sight of what is certain in our lives, including the tremendous commitment and sacrifice made by all who have served, or continue to serve, bravely in our military to keep our nation, and all of us, safe.
To all the men and woman who have put their lives on the line in defense of our freedom – Thank You.
Please call if you have questions regarding potential market impacts due to current events, or if you would like to discuss your financial plan / investment strategy. We are here for you - throughout your life’s journey.