The Dow Jones Industrial Average is up
That was fast. In two days, the Dow Jones Industrial Average is up around 1800 points.
Even though the polls recently showed a dead heat between the two presidential candidates, it ended up being a widespread victory for President Trump.
I think the pollsters may want to borrow the page from Charlie Munger’s book about forecasts, which we wrote about recently. Pollsters are making forecasts with supposedly updated information, but it’s a forecast nevertheless. And it was very wrong.
We have received no shortage of questions regarding the potential short-term effects of the election on the market. Our frustrating answer is we don’t know and now it is obvious that nobody else seemed to know either, or the market would have gone up a good bit beforehand.
Which brings up how the stock market really works. Most of the stock market’s returns occur in a handful of big days. And if you are not there beforehand, it is too late. The stock market opened up over 1400 points the day after the election.
The chart below shows the last 30 years return of the S&P 500 and the benefit of being invested at all times.
Source: Ned David Research
Investor behavior is often more important than the market’s behavior. Investors who try to zig and zag in and out of the market need a very high-quality crystal ball. And we haven’t found one yet.
On a different note, walking out yesterday after casting my vote, I thought of how rare that privilege is, which I have often taken for granted. The fact that I could chose whomever I thought were the best people to be our leaders, without someone telling me what to do or looking over my shoulder, reminded me of the huge sacrifices that allowed me to do that. And the huge debt that I owe them.
As always we will be in touch but don’t hesitate to reach out to us in the interim.
Thank you for your trust and confidence.
Beach
Disclosure: Any opinions are those of Beach Foster and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. Past performance may not be indicative of future results. The Dow Jones Industrial Average (DJIA), commonly known as “The Dow” is an index representing 30 stocks of companies maintained and reviewed by the editors of the Wall Street Journal. The S&P 500 is an unmanaged index of 500 widely held stocks that is generally considered representative of the U.S. stock market.
