Summer Slowdown & Impending Election

Oil prices continue to decline due to lack of demand, no hope for increase insight as we close on a summer with fewer family vacations. A drop in market-leading tech stocks like Amazon, Facebook, and Netflix last week is leading to more of a sell off after the holiday weekend. Companies like Lululemon, Slack, and Zoom are still benefiting from becoming the work-from-home essentials in 2020.

Historically, a growing and steady market would lead to the best odds for the incumbent candidate. Aside from the uniqueness of 2020 politics, market volatility is expected in the three months leading up to a presidential election. Yet, there is an obvious reminder than expectations can be incredibly wrong if we look back just four years to the 2016 election. 

At the time, predictions of a Trump win over Clinton were not only few, they were met with the added assumption that his presidency would lead to a complete market collapse. Instead, we saw wage growth and low unemployment, prior to the global pandemic. The economic growth in President Trump’s first term would have been near 2.5%, but after 2020 losses, it may not end above zero according to the Washington Post. 

Remaining rational, and remembering to keep the emotional side of politics out of one’s investments is always a challenge, but it certainly feels impossible as we look toward the end of 2020. At best, investors can keep in mind the fundamentals. Including understanding the drivers of a benchmark like the S&P500. 

Apple, Microsoft, Amazon, Facebook, and Google make up approximately 20% of the S&P500 which means that the technology sector has much to do with the gains we have seen this year. 

As we continue to see outstanding double-digit growth from companies that are integral to our daily lives, we are should keep in mind the attention they garner from legislators who cannot ignore their size. 

Regardless of the presidential election result, it is likely that demand for reform will follow this recent tech boom.