Well, the election is two weeks away with many voters making use of early voting and mail in Ballots. According to LPL, the stock market is more centered on COVID-19 cases and its effects on growth for the U.S. economy than on what happens in the election. Also, Speaker of the House Nancy Pelosi and Treasury Secretary Steven Mnuchin continue to meet and discuss a possible additional COVID-19 relief package for struggling Americans. If a successful package is agreed upon it will be viewed as stimulative for the economy and will most likely have a positive impact for equities. These certainly are interesting times.

Many clients are asking me why is the stock market acting so well when there are so many uncertainties? The simple answer is the stock market is trading on expected earnings for 2021 and beyond. That is where LPL Research is putting its focus and where we should put ours. 2021 is when economic conditions may return to some semblance of normal. LPL Research estimates that the amount of earnings that S&P 500 companies can generate after the pandemic ends, is about $165 per share. The combination of efficiencies gained during the recession (which LPL thinks ended a few months ago), the strong performance of winners, and the tremendous progress in COVID-19 treatment and vaccine development, all suggest we may be only a year away from reaching normalized earnings, but they realize the exact timing of that is difficult to predict.

One of the negative consequences of an aggressive Federal Reserve (Fed) is incredibly low interest rates. Yes, mortgage rates are low and that is driving a residential real estate boom, but for seniors who depend on bank rates, Certificates of Deposits or some type of government, municipal or corporate fixed income bonds, these low rates are painful. Looking ahead, it seems that these low rates will last for the foreseeable future and we need to accept this new reality.

LPL Research has a year-end target range on the S&P 500 Index of 3,450 – 3,500, based on a PE ratio of near 21x and they anticipate further gains for this young bull market as the new economic expansion continues. They acknowledge that the election is a wild card, but history tells us election driven volatility tends to be temporary and is often followed by solid gains.

We certainly all hope this pandemic ends in 2021, one way or another. Until then, we at Legacy Wealth Planning hope you are staying safe and are getting through this challenge with as few difficulties as possible. If you have any investment questions or needs, do not hesitate to contact us. – Mark

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. No strategy assures success or protects against loss. Economic forecasts may not develop as predicted. Some of this research material has been prepared by LPL Financial. All indices are unmanaged and may not be invested into directly. Referenced material: LPL Research Weekly Market Commentary dated October 12, 2020 and LPL Financials Ryan Detrick’s Client Letter dated October 1, 2020, Tracking #1-05061539.  LPL Approved Tracking #: 1-05070129.