Another week, another S&P 500 record high
Last week, the SAS newsletter highlighted the DNC, the impact of the Federal Reserve on markets, and the Fear of Missing Out when assessing investing new cash or selling out of certain investments - essentially, holding on to conservative allocations, enough to reach client goals, without reactionary selling.
Another week, another S&P 500 record high. Apple stock is about to split and the NASDAQ continues to climb. Five stocks are providing the majority of the gains, and yes, you can probably guess which five: Apple, Google, Microsoft, Facebook, and Amazon. The forward-looking and backward-looking price/earnings ratio for the S&P 500 are both at historic highs.
Larry Kudlow, the head of the Council of Economic Advisors spoke earlier this week as if the pandemic is over. It seems the stock market is in his camp. Two Americas look like Wall Street and Main Street. Two markets are the bond market and the stock market. A Federal Reserve governor discussed a double dip recession forecast.
Our evaluation of all these developments is continued caution going forward. As the election draws closer mixed economic signals are likely to converge with general uncertainty around the pandemic, the economy and the election results in November.
We have learned that during times like these it is best to avoid and postpone big decisions, especially major life changes. There is enough change happening around us. Two weeks ago my wife and I were thinking about how nice it would be living in the suburbs up north where we could have a backyard. That opinion quickly changed with the latest fires burning throughout Northern CA and we decided the safest place to be was San Francisco.
Even writing our newsletter within today’s rapid news cycle, the RNC this week, the continued racial violence and quest for racial justice, including reactions by the NBA and the season which hangs in balance - have all occurred since we began drafting this week’s client newsletter. We remain vigilant, aware, and steady.
It’s remarkable how quickly things and circumstances change. The grass is always greener. Times like these remind us as planners that a Plan helps you aim and mindset will help you navigate. Life will happen. Change will ebb and flow. The future can be planned for, but mindset in the moment will help you succeed. The most we can control is how we react to what is happening.