QPW Market Update 10.30.2020
November 3, 2020
A letter from Kori Lannon- Founding Partner/Private Wealth Advisor
Halloween Edition – Edgar Allan Poe on 2020
“It is by no means an irrational fancy that, in a future existence, we shall look upon what we think our present existence, as a dream.”
- Edgar Allan Poe, “Marginalia”, 1836
Our “present existence”, a dream? A bad dream, maybe. Or a nightmare! Since my aim is not to depress everyone, let’s not dwell on that. Let’s take a moment to look backward, and then look forward.
I suppose we could parlay “A Descent Into The Maelstrom” or “The Fall Of The House Of Usher” into a reflection on the unprecedented market mayhem experienced by investors in March. We could maneuver Poe’s “The Gold Bug” to make the case that, although gold performed quite well over the summer, there could still be meaningful upside to the metal in the face of likely additional global stimulus and currency debasement, prolonged low and / or negative interest rates, and what remains to be an abundance of uncertainty.
Some time has passed since our last letter of this kind. What tricks and treats have transpired in the interim? We had a 4th of July mostly absent of fireworks. COVID surged across the sunbelt. South Dakota hosted the Sturgis Motorcycle Rally during a pandemic. California and Colorado are tragically burning, and eleven named storms, including Zeta just this week, have pounded our coastal states. Professional sports leagues squeezed in their seasons in a myriad of COVID-adapted ways. Schools across the country struggled with how to execute on educating their students this academic year, and have proceeded in countless different fashions. Many college students arrived on their campuses only to be sent home or locked down. Social unrest persists in our headlines, if not visibly firsthand in our communities and neighborhoods. Nonetheless, the S&P 500 continued its melt-up, led mostly by a handful of mega tech companies, and experienced a pullback in September, led mostly by those same companies. American teenagers (and many adults) universally were spooked by the prospect of their beloved app TikTok ceasing to be accessible (crisis averted). President Donald Trump got COVID, and quickly recovered under leader-of-the-free-world caliber care. Kanye joined the race for President (I think), and then dropped out (I think). In a contentious situation that spotlighted two truly remarkable, intelligent, and pioneering women of law, Supreme Court Justice Ruth Bader Ginsburg passed away, and her vacancy on the court has been filled by Amy Coney Barrett.
This reminiscence brings us to today, back to “The Masque Of The Red Death”. What is behind the mask? In this week that features a hurricane, Halloween, a blue moon, and a changing of our clocks, the Dow also sold off 943 points on Wednesday. Scary. What will the next several months bring? I think that many of us are expecting a trying winter. The news cycle (or should I say “opinion cycle”?) seems to be cueing a “second wave” of coronavirus, which appears logical given the inevitable – as a country, we will be forced to spend much less time outside in open spaces with fresh air. France and Germany both announced new rounds of lockdowns (or lockdowns-lite) this week. Next spring will probably be the most welcomed spring of our lives! With regards to next week’s election, consensus among analysts and experts and witches and ghouls seems to be that the market’s biggest risks lie not in who wins, but in how long it will take to determine who wins. Will we know by Thanksgiving?
As a firm, we anticipate market volatility post-election, a period that is likely to be marred by controversy, and exacerbated by our “present existence”. Nevertheless, we are hopefully optimistic over the longer-term. It will most probably be some time before the economy can find solid footing upon which to build a sustainable recovery. Reliable vaccines, logistics to distribute them, and the population’s confidence in taking them will be the keys to economic recovery, much of which hinges upon the consumer and employment. Those things will all take time, but they will come. The shock and surprise of our initial encounters with coronavirus are behind us. We are learning to live our lives in a pandemic era, a skill that I don’t believe any of us ever expected to master. As the saying goes – this too, eventually, shall pass.
“Thank Heaven! The crisis,
The danger, is past,
And the lingering illness
Is over at last –
And the fever called “Living” is conquered at last.”
- Edgar Allan Poe, “For Annie”, 1849
Wishing you all a fun and happy Halloween weekend in our “present existence”. I have heard of some people who will be sling-shotting candy (lob trajectory, I hope) to socially distanced trick-or-treaters, or shuttling the goods down from the front porch through PVC pipe.
Parting advice from me and the ghost of Mr. Poe: If you do celebrate with some frighteningly fine wine this weekend, please beware any host who invites you down to his catacombs and wine vault to taste a rare vintage from his “Cask Of Amontillado”.