It’s again the pre-election month! This month historically is not short of drama. It’s not surprising that this year there are even more. However, the financial market seems to already price in some results.

 

In July, the rise of all the renewable energy index started to accelerate versus S&P500 index, implying that Joe Biden’s chances of winning the presidential election largely increased, as the two presidential candidates couldn’t disagree more on energy policy. Even so, we should not implement our investment strategy by betting on who will win the presidential election.

 

There is an empirical analysis on the relationship between stock performance and which party is winning election. The answer is indefinite. As for the current situation, the economy and stock market performance depend more on whether an effective vaccine will be in place by the end of the year and whether the proposed fiscal aid will pass soon.

 

There are currently 190 vaccines under research. 10 of them are in the study of final phase. According to the precedence, the possibility of developing an effective vaccine is relatively big. As financial aid for small businesses and the unemployed, no matter who wins the election, a rescue package will pass swiftly. The actual aid could arrive at the beginning of next year if it’s delayed.

 

The financial market is full of uncertainties. The everyday movement of the stock market is a random process. However, in the long run, the market is driven by underlying factors impacting companies’ earning ability.  The fundamentals right now are the Treasury Department and Federal Bank’s commitments to bolster the economy.  America still has ability and room to take advantage of its magic money, although an abusive usage without check will limit its power.

 

I will be watching the election with you.

 

IMPORTANT DISCLOSURES

This information has been designed for general informational and educational purposes only and does not constitute an offer to sell or a solicitation of an offer to buy any security. Such offers can only be made where lawful under applicable law. These materials have been obtained and derived based on information from public and private sources that Pearl Wealth Management LLC believes to be reliable. However, no representation, warranty or undertaking, stated or implied, is given as to the accuracy or completeness of the information contained herein, and Pearl Wealth Management expressly disclaims any liability for the accuracy and completeness of this information. Pearl Wealth Management does not intend to provide investment advice through these materials and does not represent that any market position, economic forecast, securities or services are suitable for any investor. Investors are advised not to rely on these materials in the process of making a fully informed investment decision and they do not render business, tax or legal advice. Each client or prospective client should consult his/her own attorney, business advisor and tax advisor as to legal, business, tax and related matters concerning the information contained herein. The information, opinions and views contained herein have not been tailored to the investment objectives of any one individual, are current only as of the date noted and may be subject to change at any time without prior notice. Past performance does not guarantee future results. All investing involves risk of loss including the possible loss of principal.


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