Prudent Retiree - What's Going On Part XL
Remember the Guess Who? The guys from Canada who didn’t like the American Woman. Remember eight track tapes? On my last day of high school, we rode in my buddy’s battered 1965 Galaxy 500 with an eight track tape player. As we celebrated, the Guess Who blasted out of the car speakers. My final ride to high school—there was a new Mother Nature about to take over my life.
A New Splendid Lady is coming to call in Washington, D.C. President-elect Biden will be moving in on January 20th. The market seems to be telling us that he’ll have a partner in the decision-making process—Senator Mitch McConnell. The Republican candidates are favored to win the run-off elections in Georgia on January 5th. If they win just one, Mr. McConnell remains the Leader of a Republican majority in the Senate. History tells us that stocks perform best during times of divided government. Change tends to be incremental and nothing extreme occurs. Should the Democrats win control of the Senate, the market could be surprised and prices may recalibrate.
The other major risk to the markets remains the uptick in COVID-19 infections and deaths. The numbers are grim and we don’t know how much worse they may get. The market is encouraged by the prospect of the availability of a vaccine. We are all banking on that. Expect volatility as the news ebbs and flows.
Our market outlook remains positive. We have increased equity exposure and the Fed continues to solidly support the economy and stock prices. The Guess Who sang that “you’re tripping back now to places you’ve been to.” Prudent Retiree has emphasized for quite some time that you don’t fight the Fed. The song went on to say “you wonder what you’re gonna find.” That’s our concern about Georgia and we’ll continue to exercise caution until we know the result. So far, though, the market is welcoming the New Mother Nature taking over and seems pleased that the New Splendid Lady has come to call.
That is what’s going on.
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