The third quarter ended last week, with the market up for the quarter but down slightly for the month. Historically, September has been a down month in the market, so this is not unusual. The news that President Trump has Covid-19 caused significant market volatility on Friday, and we saw an overall decline in stock prices.
The election is already causing volatility in the markets, as people speculate on a win by either side. It’s important to note that markets do equally well under Republican and Democrat administrations. They do best when there is a split government, and worst when one party controls both houses of Congress and the White House. That’s not to say that laws and policies don’t affect the economy. But which party is in the White House does not directly impact returns.
If you’re worried about the election impacting your investments, the best thing you can do is make sure your investments are aligned with your goals. If you are saving for a long-term goal, like retirement that’s ten years or longer away, the volatility can be your friend. If you are making regular contributions to your 401(k) or other investments, when the market drops, you are buying more shares with the same contribution. You’re buying things on sale. Generally, the farther away the goal is, the more risk you can take. The necessity of the goal also comes into play. If it’s a must-have, such as retirement income to cover mortgage, groceries and healthcare, that’s something you might want to be a bit more conservative with than investing for a boat or second home.
Once your investments are aligned with your goals, don’t fall into the trap of trying to time the market. In the long run, the markets work efficiently. In the short run, markets reflect all the insanity that is the human condition. Speculation and emotional reactions can drive short-term market fluctuations.
With that in mind, October is Financial Planning Month. I firmly believe that everyone can benefit from working with a financial planner. Our lives have become increasingly complex with investments, insurance, mortgages and taxes all playing a part. It’s a full time job for me to keep up with all of the changes and nuances that come into play. Which means using a professional to help your family plan for the future is a smart decision. Check out our website at covingtonalsina.com, or visit our Facebook page to learn about our line-up of educational events.
Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Great Valley Advisor Group, a Registered Investment Advisor. CovingtonAlsina and Great Valley Advisor Group are separate entities from LPL Financial.
All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investment(s) may be appropriate for you, consult with your attorney, accountant, and financial advisor or tax advisor prior to investing.