“Off the Wall” blog
Unique, straight-forward, unfiltered opinion on topics of concern for individuals with newfound wealth.
It’s November, and in a cruel twist of fate, 2020 forced an additional hour on us all this weekend as we roll into the final two months of the year. I think we are all hoping 2021 is a different situation, but right now, there will be nothing else more dominating in the news than tomorrow’s Presidential election.
But allow me to bypass that topic and give some thoughts on what investors should be thinking about. To start, answer these straightforward questions:
- Do you suppose COVID will recede by next spring?
- Do you suppose vaccines will become available in the first half of 2021?
- Do you suppose better medical treatments and therapeutics will continue reducing hospital stays and death rates?
- Do you suppose better testing will allow for faster and safer openings of businesses, schools, and services?
- Do you suppose there will be trillions of new dollars in additional stimulus in 2021, regardless of the election outcome?
- Do you suppose the Fed will keep interest rates near zero?
- Do you suppose economies, GLOBALLY, will still be improving by next spring?
Framing your perspective based on your answers is important.
I answer “Yes” to all of the above.
Look, here’s the thing…if you go searching for bad news, you will find it.
The best thing to do right now is to stop listening to idiots on TV who really have no clue about what’s in front of us. They are using the rearview mirror to predict what will be seen through the front windshield.
Remember that the current economic problems are a function of the COVID pandemic and are not the result of financial stress or banking issues.
Monetary institutions/governments have injected a TON of liquidity and fiscal stimulus to help get everyone through this. There are literally trillions in excess liquidity in the financial system GLOBALLY, and it’s probably far more than what is needed economically. The economy was roaring before COVID.
But look, I get it, there are current and near-term events in front of everyone’s face right now. But the successful investor must focus on the next 12 to 18 months at a minimum and have their portfolios positioned appropriately.
And on that note, remember – cash is your friend. It’s liquid, it’s a cheap, short-term hedge, and it’s a way to manage anxiety. Seriously, this time next year, all this election drama will be behind us and maybe even the COVID issue too.
Because I answered “Yes” to the questions above, I think the big story for 2021 will be record earnings, operating margins, and return on invested capital.
Being an investor during periods of uncertainty is hard, but face it, it’s ALWAYS an uncertain time. You need to have a good strategy and understand that yours is different from everyone else’s. You need to monitor your wealth plan and portfolio to ensure it is still valid and incorporate proper assumptions.
No matter who wins tomorrow’s election, patience and discipline will always reign king when it comes to investing. At the same time, a healthy perspective of where we are going is also essential in evaluating risk, return and liquidity over your own personal time horizon.
Keep looking forward,
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