As we prepare for the fourth quarter of one of the most economically volatile years in our history, I wanted to highlight a few key areas we are watching in the markets. Over the next six weeks, we will be hearing from both U.S Presidential candidates regarding their plan for the next four years. As of today, polling remains tight, with Donald Trump recently gaining in the polls.
2020 Presidential Election:
The election seems to be top of mind for most clients recently. While we understand that debates surrounding this year's election have become heated, we must try to keep the emotionality out of our investment strategies. We have, therefore, outlined the pros and cons of each party's platform in regards to the financial markets. Financially speaking, both the Democrats and the Republicans have their strengths and weaknesses, but the individual who becomes president has very little bearing, in and of himself, on what actually happens to the financial markets. No matter who the candidates are, market volatility in the weeks leading up to an election does pick up. The chart below shows that during the fourth quarter of an election year, on average, the S&P500 returns 1% less than a non-election year.
How have we prepared:
As always, we rebalanced clients’ portfolios at the beginning of September. Currently, our equity model consists of 70% U.S equities and 30% Canadian equities. Before the September rebalancing, our U.S exposure ran to 74% with our technology holdings rising significantly since April. We trimmed stocks such as Apple, Amazon, Facebook, Google, Adobe & Microsoft. Timing our rebalancing strategy is almost impossible, however, technology stocks have shown some weakness in the past few weeks. Moving forward, we still see opportunities in the tech, health care and consumer sectors and remain bullish on gold bullion.
Our commitment to clients:
This year has been our team's most successful on record. We believe this is a direct result of the commitment we made over the past few years to provide clients with the best wealth management experience possible. During our on-boarding process, we provide our “family office” promise to each new client, which includes the following:
- Every client has a personalized investment portfolio with a fully transparent fee structure
- Every client has a written, up-to-date financial plan
- Every client has an up-to-date will
- Every client has had a comprehensive estate planning review
- Every client utilizes the tax-efficient investment strategies most beneficial to their own situation
- Every client is offered a fully digital experience, including online statements, tax documents, and remote meeting capabilities
Sincerely, Kyle Sarai, MBA