In recent weeks several clouds of uncertainty have dissipated. We now have a handful of strong vaccine candidates ready to distribute in the near future. These vaccines have upwards of a 90% effective rate, allowing us to end the pandemic in 2021. We also got past the chaotic 2020 election with a deeply divided government. It appears Joe Biden will preside over a near 50/50 House and Senate. Republicans picked up key house seats, seemingly lost the Presidency, and the Senate will be decided in January. Finally, the economic recovery seems to have slowed down, but continues. With these events taking place, I made only minor adjustments.
Overall, vaccines coming out are fantastic news. On the economic front, the Fed has pledged to keep interest rates near zero for the foreseeable future. U.S. Q3 GDP surged by 33.1% indicating a strong economic recovery. Wall Street also appears to be betting on another bipartisan stimulus bill to pump more money into the economy. Politically speaking, it appears the Presidency was stolen. After all Trump carried bellwethers like Florida and Ohio by strong margins. Republicans also did well in Congress and local elections. Massive late night ballot dumps in key cities appeared to swing the election nationally. Irregularities indicate the race was stolen, but there’s no way to really know.
In any case, I believe corporate America will do just fine. Both major parties are heavily influenced by lobbying efforts and corporate donations. It’s unfortunate but at the same time it’s reality. Therefore, as I’ve said on many occasions, I believe it’s important to have a strategy and stick with it. Money is like a bar of soap. The more you handle it the more is shrinks. So over the past few weeks I’ve only made minor adjustments. I’ve always hedged against the U.S., with my base holdings having strong international exposure. To top this off I sold off 1st Source Bank for a small profit and reinvested the money into Royal Bank of Canada (RY). I then logged into my IRA and bought shares of Alibaba (BABA).
I also added on to my positions in Telus (TU) and Unilever (UL). I will cover my newer positions mentioned above in subsequent posts. My point is diversification is key not only in the number of holdings, but WHERE they do business. The U.S. is deeply divided, trillions in debt, and appears to be a declining economic power. And while the same is true elsewhere, I think it’s important to have exposure in all key markets. One country here or there may be on the decline. But, overall, the quality of life almost certainly will improve in the long run. Innovation will continue to happen, the population will grow, and economic activity will always take place. Buying great businesses with global exposure should allow us to benefit off these trends.
I am long on TU, UL, BABA, SRCE, and RY. I am not a licensed investment adviser or tax professional. I am not liable for any losses incurred by any parties. This blog should be viewed for entertainment and/or educational purposes only. Any transactions published are not recommendations to buy or sell any securities. Please consult with an investment professional before making investment decisions.