This year seems as though it has lasted 10 years with all that has happened! Here we are with three quarters of the year in the rear view mirror. We have experienced one of the sharpest and quickest economic down turns in history followed by an unprecedented rise to the upside erasing most if not all market loses in the shortest time frame on record!
Many are wondering what the “new normal” is going to look like once we emerge from the pandemic. I personally think that COVID-19 is here to stay and we can add it to the list of other diseases we have learned to live with over the years. There is not going to be a cure. It is a virus just like the flu. The last time I checked, there was no cure for the flu. From what I understand, a vaccine will hopefully help us avoid COVID for periods of time but cannot guarantee that we will never get it at some point in the future. We are not certain how many will actually take a vaccine once one becomes available. If parents will not get their kids vaccinated for measles, how likely is our society to get vaccinated for COVID?
The “old normal” is gone, replaced by the “new normal”. The question is what is the “new normal”? Look at how your life has changed since last year at this time. Renormalization is the complete dismantling of what we once accepted as normal and the loss of any future version of normal, according to modern-day philosopher Charles Smith.
The financial industry is also experiencing a major evolution. The “old normal” included automobile manufactures like Ford, GM, Nissan and Toyota. The “new normal” is TESLA, which has a market capitalization bigger than all of the old automobile companies combined. Exxon Mobile, one of the Dow stocks for over 30 years, was just delisted from the DOW (the top 30 companies in America) and replaced by three technology companies. The energy sector used to comprise 12.1% of the Dow weighting just ten years ago. Energy stocks now account for just 2.3% of the Dow. At Global View, we are carefully monitoring the new economy and will take full advantage of ways to make our clients’ money as the “new normal” emerges.
During the third quarter, we experienced one of the best Augusts in market history followed by a correction of 10%, which is not uncommon. As I have stated before, the fourth quarter will be volatile leading up to the election. The great news is that interest rates remain at all-time lows, employment continues to increase and a vaccine is just around the corner.
Click here to show a piece showing the market history over the last 80 years including the average annual rate of return factoring in all the up and down markets. Over the long haul, the market has proven to be one of the very best ways to make money. We always look at the glass as half full. Thank you for allowing me to be of service to you. Best wishes.