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Market Comment from Pacific Wealth Management (October '20)

Insights

    • Pacific Wealth Management’s risk management disciplines have helped our investment portfolios effectively weather 2020’s market volatility and participate productively in the early stages of the recovery.
    • The steady reopening of our economy has generated improving business activity and progressively lower unemployment over the last six months, recovering half the jobs lost earlier in the year.
    • Although stock markets today are relatively expensive, they will continue to appear more attractive for long-term investors, when compared to low yielding cash and bonds.
    • We believe it is probable the U. S. will endure a high-profile contested election battle that may progress into December.

    We hope you and your family were able to enjoy a fun and healthy summer.  

    2020 has certainly been a historic year by all measures, beginning with the global pandemic, then world-wide government mandated shutdowns, elevated social unrest, and most recently President Trump’s COVID diagnosis. Now, with the last quarter of the year upon us, we find ourselves on the home stretch toward the long-awaited contentious November elections. Uncertainties abound.  

    The slow but steady reopening of our economy has generated improving business activity and progressively lower unemployment over the last six months, recovering half the jobs lost earlier in the year. The financial markets have viewed COVID as a transitory event ever since Jerome Powell cut interest rates to 0% and pulled out the figurative “blank check”, stating the Federal Reserve would spend whatever it takes to get the economy back on its feet.  Wall Street began visualizing the future recovery and the “bounce-back rally” began in earnest with a surge in stock values that began in late March and continued into early September.  The stock market’s rapid rise did get ahead of itself and became over-valued by late summer.  Recently, markets have cooled down and been digesting some of those extraordinary gains.  Despite stocks looking relatively expensive today, we feel they will continue to appear more attractive for long-term investors, compared to the low yields on cash and bonds, in the over the next 2-3 years.  We see global stock market values moving higher by the end of 2021.

    Coronavirus remains at the forefront of the world’s consciousness.  Six months into the pandemic, we are still in the throes of the worst global recession since the Great Depression. Fortunately, there has been a consistent stream of encouraging news on the vaccine and therapeutic treatment front. Most healthcare systems have not been overwhelmed, while hospitalizations and deaths from COVID-19 remain relatively low, despite the positive case count continuing higher.   Recent government policy responses to surging hotspots around the world are being managed more effectively. Focused, localized restrictions are achieving successful results, while minimizing the economic impact cost so many people and businesses endured with the earlier broad-based lockdowns.

    Pacific Wealth Management’s risk management disciplines have helped our investments effectively weather 2020’s market volatility and participate productively in the early stages of the COVID-pandemic  recovery.   We expect plenty of drama, media noise and choppiness in the financial markets between now and year-end.  Regardless of the initial election-result news, we believe it is probable the U. S. will endure a high-profile contested election battle that may progress into December.   That said, our resilient American democracy has a 244 year history of successfully transitioning political power, if that is our election outcome.  

    Please let us know if you have any questions, concerns or comments.  We are looking forward to being a retirement and wealth planning resource for you and your family. We hope you, your family and associates remain vigilant, safe and healthy.


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