This election cycle has produced a great deal of turbulence and uncertainty. The entire Sequoia Team is closely monitoring the situation, and want you to know that we have worked to position our portfolios to accommodate a variety of outcomes. While we can’t predict the future, we would like to offer some observations:
- Irrespective of who occupies the Oval Office, there is a likelihood of more fiscal stimulus now that the election is over. If President Trump is re-elected, he will likely seek to get the economy back on track in light of developments in the pandemic. If former Vice-president Biden is elected, he will want to put forth stimulus as well. Stimulus is good for the short-term economy (and bad for long-term debt).
- The possibility of a ‘Blue Tidal Wave’ seems diminished and the probability of massive tax changes seems unlikely in the near term.
- Although the Covid-19 Pandemic still rages, we feel that the US economy will recover and stabilize, although we expect to see diverse outcomes within different sectors and asset classes. We have plans in motion to address those shifts, should they occur.
- When the election result is determined, it will bring closure to the uncertainty of the election itself. Closure is more comfortable than the unknown.
Turbulence is a naturally occurring consequence of a free market economy, and is often tied to impending change and the uncertainty it creates. There is a difference between turbulence and direction. The turbulence we see (positive and negative) is usually temporary, unlike direction, which is a trend we see play out over time, and thus, is not a determining factor in the decision of when and how to stay invested. Our most important priority is helping our clients reach their goals. To that end, we’ll remain vigilant, watching the markets and remaining nimble enough to adjust our sails no matter where the wind takes us.
Look for further communications from us as things evolve, and please do not hesitate to contact your Advisor if you have any questions in the interim. As always, thank you for your relationship with Sequoia.