Hi, I’m Erik Wolfers, founder and managing member of First & Main Financial. We’ve been helping our clients with totally customized personal financial solutions since 2001. Today is Wednesday, November 4th, 2020, the day after the presidential election—and there were many other races in the House and Senate and of course lots of ballot measures. The election has not been decided; it looks like the trend is for Joe Biden right now. The stock market is up a lot and we’re still not out of the pandemic.
In our work we face a lot of fears and assumptions by clients about how things might affect the stock market and which way things might go. Should portfolios be changed according to how people are feeling or what they think might happen?
I’m not sure that a lot of people would have predicted that the stock market be up this much the day after the election, even though the results have not been finalized. What we tell our clients is that ultimately returns in the stock market are based on the profits delivered by the companies that make up the stock market, and their ability to make profits based on the amount of capital resources that they have in place. Some companies are exceptionally good at making a lot of money, some companies don’t make as much—thus comes in the pricing element or how much you pay for earnings of the company in which you might want to participate or have some fractional ownership.
Ultimately it does come from profits, which are really just driven by human need. People wake up every day around the world and they want to live a good life and have a better life for their kids and consume basic goods. Some people have the ability to consume more expensive goods—such as vacations and luxury goods. It’s all so deep and complex it’s hard to fathom, which is another thing that I talk with clients about. So many things have so much more complexity than you can imagine because most of us live with what’s in front of us, which is normal human behavior.
So long as the global economic system remains intact and there’s some ongoing element of capitalism and economic progress, then it’s likely the stock market will continue to advance as it has since the beginning, since the inception of the stock market. At this moment there’s no evidence or some indication that the whole global economic system is going to change or evolve into something else that doesn’t involve the use of capital in the generation of prophets. It’s likely that if we stay invested and we invest our portfolios appropriately, according to our time frame for when we need money, then we’re likely to generate returns for ourselves and build wealth and meet the needs of retirement or college savings, or whatever it is that are our goals.
Hopefully there will be a decision soon on the presidency, but as of now the stock market is happy.
If you are looking for some financial guidance; whether for a one time financial plan or continuing advice on your investments, we invite you to meet with a First & Main Financial planner for a free consultation. We would be more than happy to sit down with you, assess your situation and review our services to help navigate your financial future.
