Is this the end of the Rally?
The stock market, as measured by the S&P 500 (The S&P 500 Index is a market-capitalization-weighted index of the 500 largest U.S. publicly traded companies. The index is widely regarded as the best gauge of large-cap U.S. equities), was down 0,66% last week and today, Monday, the 21st of September is 3,281 or down 1.16% by the end of the day. Does this mean the “recovery” from the “initial-post-covid” crash of March is over?
My only suggestion is: “Don’t micro-manage” your investments. Stop paying so much attention to daily / weekly / monthly changes.
Managing your financial plan is a big-picture / wide-focus effort.
But to satisfy your curiosity. The S&P 500 closed out 2019 at 3,231; was up to 3,330 in mid-January; bottomed-out in March at 2,237 only to recover to 3,501 by the end of August. And today, September 21 the S&P 500 closed at 3,264. So, we are even for the year and up a bit from September 30, 2019 at 2.976. (1)
This volatility is NORMAL -- even in a “normal” year that does not include a presidential election, Supreme Court nomination fight or a global pandemic. See the chart attached that illustrates market swings during the year and market closes for the year. (2)
Thoughts on the economy. As a general rule, lower-income people tend to be spenders (since the have little discretionary income) while higher income folks tend to be savers. Most of the people I talk to (higher-income folks) tell me they are spending less money now than before because they are not going out to eat, traveling, going out to movies, theater or sporting events. Therefore, they are probably not helping the economy. However, when Covid shut down the economy, lower-income people continued to spend on food, housing, and their essentials because they had the increased government benefits even if they lost their jobs. This helps feed the economy. Now with the former Federal unemployment benefits gone and the appearance that Congress and the President are not focused on additional benefits, the economy may suffer.
In case you want to know, in August 2020, America had 123.6M people working. This is up from 113.7M from April 2020 but down from 132.2M in August 2019. The national unemployment rate was 8.4% in August, improved from May of this year at 14.7% but way down from the 4.4% in March of this year. If the numbers are confusing, more people are working from a few months ago but there is still a very long way to go to get to good. (3)
The TSA screened 847,968 fliers at US airports September 20, 2020 up a lot from April 28 when they screened only 110,913. So great news, eight times more fliers. Well yes, but don’t forget that 2.5M people per day were flying in 2019. (4)
So yes, the economy is getting better. No, the result of the Presidential election will probably not affect the economy in the short-term or perhaps longer term. Yes, the markets may react to one outcome or the other. But hating the government or the current President or who might be the next President is not a good investment philosophy. This can be a lengthy discussion so call me.
As a suggestion, make your financial plan first. The investments are the tools used within the plan. Investments are not guaranteed and are subject to investment risk including the possible loss of principal, so that when redeemed, may be worth more or less than the original investment. So unless you are changing the plan, you probably won’t want to change the investments. Call me with questions or concerns.
- https://www.google.com/search?client=firefox-b-1-d&q=s%26p+500+returns#scso=_aSBpX9yjIo--0PEPm5qFgAw8:0. You cannot directly invest in the S&P 500.
- https://www.invesco.com/us-rest/contentdetail?contentId=aa23305aad4fd610VgnVCM1000006e36b50aRCRD. The chart comes from page 14.
- https://www.bls.gov/news.release/pdf/empsit.pdf
- https://www.tsa.gov/coronavirus/passenger-throughput
Investment Advisory Representative and Registered Representative of, and Securities and Investment advisory services offered through VOYA Financial Advisors, Inc. (member SPIC)
The views and opinions expressed are those of the author, and the information should not be construed as individual investment advice, or as the opinion(s) of Voya Financial Advisors. CN1339123_0922
