by William Henderson, Vice President / Head of Investments
Well, 2020 continues to shock and awe us and the markets. The news of President Trump and Melania Trump testing positive for COVD-19 certainly was news, and in an already packed wild news year. A Black Swan event is an event so rare, that the results cannot be modeled nor predicted. COVID-19 was our 2020 Black Swan event and thus far the markets have held up and the economy is coming back from an uncanny recession due to huge fiscal stimulus and massive monetary stimulus. The rule on Wall Street has always been “Don’t Fight the Fed,” and we have no plans on doing so. Fed Chairman, Jay Powell, has promised to do whatever it takes to keep the economy on the road to recovery and will use all tools in their monetary toolbox to do so. With that said, we remain positive on the U.S. Economy overall, and especially with a long-term view. There is a piece of framed artwork on the walls of the Valley National Financial Advisors office depicting the contributions of James Pierpont Morgan to the United States Economy in the 1800-1900s. I love this quote in the piece attributed to J. P. Morgan, “any person who is a bear on the future of the United States will surely go broke.”  

Although the news concerning President Trump affected Friday’s markets, all three market averages managed to end the week in positive territory. For the week that ended October 2, 2020, The Dow Jones Industrial Average was up +1.9%, the S&P 500 Index +1.8% and the NASDAQ +1.5%. Energy continued to be the worst performing sector while real estate, utilities, consumer discretionary, technology and financials all held up well. We had spells of good news in the economy. Unemployment fell by more than forecast, dropping -0.5% to 7.9%. Year-to-date returns remain mixed with the Dow (3.5%), S&P 500 +3.6% and the NASDAQ +23.4%. 

2020 will be remembered as one of the most difficult and tumultuous years in recent history for investing. October surprises impact markets and Black Swan events really impact markets but always over history, markets have recuperated. There have been four days in in 2020 where the S&P 500 Index fell by more than 5%: February 24 (-9.3%), March 9 (-5.3%), March 16 (-8.1%) and June 8 (-5.0%) and three days where the S&P 500 Index rose by more than 5%: March 23 (+10.9), April 6 (+8.0%) and June 1 (+5.1%). Just 7 days in the year gave so much volatility yet on a year-to-date basis the S&P 500 index is still up 3.6% as of October 2, 2020. Our investment thesis at VNFA remains – choose a clear and balanced investment plan, have a long-term view of your plan and allow us to monitor and limit your risk.