The past few months have been a rollercoaster ride for major indices. I feel like we have a few more major hurdles to go through before an all-clear signal is given and a rally can continue. As of today, October 20, there is still much uncertainty - and the stock market HATES uncertainty.
Let's start with the election. At this point I don't think it matters who wins the election. The market just wants to see a clear winner who doesn't challenge the results. Of course, history has shown that certain baskets of stocks do better under Republican leadership, while others perform better under a Democratic President. If you have some money you are looking to put to work, I'd consider waiting a few more weeks until this element of our future is determined.
The next thing on everyone's mind is stimulus. Will there be another package? I think there is a 95% chance our government will settle on the next round of stimulus before the end of the year. This will not only help fuel small businesses, but also keep consumers afloat during the next wave of COVID-19 (and what I think will be the worst and final wave). Remember, when our country shut down earlier this year, we were coming out of winter and into warmer weather. This time around, we are going to have to feel the brunt of the storm. While I don't think the country will close again, I do think people are going to be very hesitant to engage in activities that may be a bit risky since there will not be many outdoor options in northern states. Think about which stocks performed well last time around and these are the ones you should consider buying.
Finally, a vaccine is coming. I predict it will come sooner than later. Politics aside, President Trump is pushing for a vaccine as if his campaign depends on it - and it very well may. There has never been a more unified worldwide scientific effort like race to find a vaccine for COVID-19. Dozens of pharma companies have invested billions of dollars in vaccine research, while others are in late stage treatment trials. I predict we will have some news in the next 30-75 days.
All this being said, these are 3 major events that we are on the verge of finding out the outcomes to. They have served as major headwinds to market performance and will all likely dissipate in the next 90 days.
Start creating a wish list of companies you want to own and look for any dips in the market to put some money to work.