It’s been a busy couple of months and more than a month since my last update. I ended off by discussing my recent purchase of Public Storage (PSA). I then followed up by purchasing Realty Income (O). Because of the zero-dollar commissions I was able to average into these two stocks on a daily basis. But again, it has been a while, so I ended up making additional trades. From late September to now I’ve added on to Altria (MO), Abbvie (ABBV), CVS (CVS), Raytheon (RTX), and AT&T (T). With lower yielding companies like Apple becoming larger positions, I purchased higher income securities for some balance. Altria, for instance, was yielding over 8% as I averaged in.
The market’s trajectory seems to be following news on three events. We have rising virus cases but a declining death rate. Stimulus negotiations continue daily in Congress. And of course, we have an election in two weeks! From what we can tell, the market doesn’t know what to believe. Yes, the virus looks like it’s spreading but at the same time it looks like we are able to treat it. We are experiencing a recovery, but the Fed mentioned we need additional stimulus for it to continue. And finally, another case of uncertainty is the election. Polling points to a Biden victory whereas evidence on the ground favors Trump.
With all this going on, I’ve decided to take a break from buying for a couple of weeks. We will have more clarity into what’s really going on in just two weeks. A vaccine approval is close. And I’m fairly certain of a Trump victory. Early voting numbers are encouraging, Biden’s polling lead is fading, and evidence on the ground suggests a Trump win. For example, yard signs, crowd sizes, voter enthusiasm etc. However, in the off-chance Biden wins I believe the market will chug along regardless. Wall Street is backing Biden in big numbers suggesting he will not move on his more progressive proposals. Republicans will also likely hold the senate and have a 6-3 majority on the Supreme Court. Even so, this election is a big question mark and we don’t know how the market will react in the short term.
Overall, markets tend to go up in both Democratic and Republican administrations. Checks and balances typically block the truly devastating policies. The largest risk to markets is the chance of a Democrat blowout with the party taking both chambers of Congress and the Presidency. Even so, I’d prefer to keep my money is businesses, not cash. Inflation could become a much larger concern with all the frivolous spending the government would undertake. Most of my companies also have global exposure, limiting the downside of a contracting U.S. economy. In any case, much of the uncertainty we face will be alleviated in the next few weeks. So, I plan on holding out until then!
I am long on O, ABBV, CVS, PSA, MO, RTX, and T. 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.