"Only the Paranoid Survive" - Andy Grove

Bubbles Politics and Other Forecasts

Markets:

• Emotions have the capacity to fumble up your financial future:

  Watching with dread or exhilaration as balances move along with the market could lead to inefficient decision making. Safety stocks are outright unicorns.

• Economic recoveries are rarely if ever in a straight line upwards:

  We typically have bumps and potholes along the way. Markets have moved on from the Virus, Nov 3rd elections and are baking in a steady recovery, driven by slow reopening of businesses unless unexpected events happen.

• Stocks do not need rapid economic growth to rise:

  As long as reality comes in somewhat better than expectations they do fine. A scan of the daily news shows the bar on expectations is rather low at this time with lots of disbelief on the recovery.

• Stimulus or not... Stocks will do fine

  As long as we get a gradual reopening, they will be fine. Certain sectors (e.g. Airlines, Hotels) of course will need support.

Elections:

• 90+ yrs. of data shows neither parties being better or worse for Stocks:

  US Market data indicates neither political party as being inherently good or bad rather to the policies being propagated and ability to make it into legislation.

• Fear mongering is an old political tradition:

  Political noise predominates as both parties and candidates put forth bombastic proposals to rally respective bases, any of these proposals will ultimately have to be passed in the House & Senate, whose make up will also change by Nov 3rd.

• Opinion polls / Exit Polls do not count in our analysis:

  Turnout decides polls, whichever party gets its supporters to come out and vote will have an advantage to state the obvious. No poll can capture that, polls are snaps shots of what people say not what they do if past history is an indicator.

• Senate results to us are more market moving:

  Legislation creates automatic winners and losers (e.g. taxation gives to someone while taking from another) which upsets the current status quo which the market is used to, those are passed by the House and Senate last we checked. The Republicans are defending more seats than Democrats which lends itself to a slimmer majority for either party which makes for current logjam to continue.

SUMMARY:

• Valuations are not predictive by themself. Investor expectation is a better indicator which remains reasonable.
• Growth stocks will continue to be at a premium in this uncertain world even if value feels easier to be in
• This year returns are likely back end heavy as uncertainly falls in November and December as events unfold to a conclusion.
• Avoid paying the cruelest tax of all... Inflation (Cash hoarders / Gold Bugs may not emerge better placed financially vs. other asset categories).

We continue to seek opportunities to expand your financial freedom... Together.

Warm Regards...
Team OneNorthStar

Ignore the Panic. Stay in stocks.