“The stock market hates uncertainty”.
Probably one of my most hated stock market axioms. Everyone hates uncertainty but it exists at all times whether you believe it or not (like science). If it’s clear to you what’s going to happen next, please give me a call. I’ve been waiting almost 15 years now, and have yet to see it.
As I told a client yesterday, the most fascinating thing to me about this particular stock market is that even if you told me the outcome of the election, I’m not sure you could make money off the information. What this tells me is that the uncertainty surrounding the economy is multi-faceted, and in my opinion the virus trumps all (no pun intended). When you find yourself in an emergency, whatever must be done eventually, should be undertaken immediately. The unfortunate part about treatment and vaccines is that they are months away at BEST. The stock market (and humanity) will cheer when the positive data is released, but this will just be step one in the eventual process of getting America back on its feet. At present 7 million people are out of work. This number will not go down in a substantial way until people FEEL it is safe to return and employers know they can protect their workers, vaccine or not.
For me, there are several checkpoints here that will lead to less uncertainty and this is what I’m watching:
- Election decision – I truly believe that the market will not care as long as the decision by the country is clear and accepted (but even that is in question these days)
- Vaccine and Treatment Data – Regeneron and Gilead will likely both have emergency use authorization in the coming days/weeks ahead for their respective drugs. To me, the Regeneron data appears to be more exciting because of its seeming ability to reduce the mortality risk. There are still issues with the production capacity of this particular cocktail, but if it works, they will find a way.
- Fiscal Stimulus – The agreement on both sides of the aisle that the American people need some help to bridge the gap during the virus is clear. The lack of an agreement by this time, after acting so quickly and swiftly earlier this year, is disheartening, to say the least. The inability for our government to compromise on something so pivotal to the literal and figurative health of our country speaks volumes about the dysfunction currently existing in DC. While I understand the political calculus, I find myself growing even more cynical about our current state of affairs. I choose to blame everyone. Others may feel differently. So be it.
So how does this relate to you and your money? I find the task of trying to navigate this particular market a fool’s errand. But luckily there is another option…do nothing. In this month’s edition of The 10th Man, by Jared Dillian, he outlines what I find to be the most pragmatic and simple explanation for how to accurately view what’s in front of us and how to prepare. I would urge everyone to give it a read.
The only thing I think I know for certain right now is that everyone is sick of this election cycle and hopefully things will get better after it’s over…but no one really knows that for sure either.
– Adam