Yes, the markets and futures around the globe have been off big early this morning and continue to be negative now because of the knowledge that Trump tested positive for COVID-19. This is noise causing (enough) investors to react in fear.
But watch for markets to close higher, but that doesn’t have to mean positive. Also, this will be a big nothing burger as far as investment markets are concerned. The big, big thing is further stimulus, plus what I have been saying for months…that regardless of who’s elected, there’s going to be massive money thrown into the markets by the Fed and all central banks around the world, which will likely drive prices higher.
Governments around the world are extremely fearful of deflation (which impacts their ability to maintain financial control) and the markets seem to have developed a strong addiction to government stimulus (it is the major thing that is driving them higher at this time).
In the short run, it will likely pay to own the markets. But eventually this dynamic will shift, which could likely cause some pretty choppy markets, even triggering another huge bear market downturn.
But remember my ongoing conversation about understanding the supply & demand flow-of-capital that I try to drill into the head of every investor. When money flows out of one market/asset class/sector, it doesn’t vanish: it is capital (money) that has to be put (invested) somewhere else.
There will be winners. And those with strategies that can see beyond all the obvious and what’s immediately and readily known (what I call 1st level thinking) to what others (the majority of others) don’t or can’t see (until it becomes obvious), will be well positioned or at least better positioned to minimize the impact of many declining assets, and at the same time, can better position themselves for gains (while the uninformed masses continue to suffer losses).
I want our investor clients to gain this knowledge, this understanding, and then see how it can be employed and applied to all your benefit.
Philip S. Hammond, CFP®
Managing Director/Chief Portfolio Strategist