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Embrace the uncertainty: Morning Brief
Tuesday, August 18, 2020
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There will always be things to be uncertain about
“Embrace the uncertainty,” writes John Stoltzfus, CIO of Oppenheimer Asset Management.
This is Stoltzfus’ message to clients as the Democratic National Convention kicks off, which will be followed by the Republican convention next week.
“In the week ahead and next, we would expect that some ripple effects could begin to be felt in market performance,” he said. “Campaign platform positions from both parties will surface, and pundits and political commentators will flush out positives and negatives with the purpose of providing their assumptions of where the country and the markets might be headed over the course of the next few months leading to the election and post-election, depending on the outcome.”
If there’s one truth about stocks it’s that uncertainty is an ongoing part of investing. There’s always something to worry about. Just take a look at the Morning Brief’s chart of the decade. Uncertainty is why the returns are higher for riskier assets like stocks.
This brings us to presidential elections, which are always a risk to investors as they represent potential regime changes when it comes to policies affecting business. But historically, elections haven’t done much to prevent stocks from going up, regardless of political party.
Even the current set of candidates and election outcomes has Wall Street analysts predicting that stocks will continue to go up or present a brief buying opportunity.
And if you’re worried about how close the candidates are in the polling, Deutsche Bank recently reviewed that history and saw that it’s generally not been a reason to get out of stocks.
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