October 2016 Newsletter to Clients

Enjoy this month’s edition that features an update on the economy and stock markets in addition to highlights on how our Chief Investment Officer, Bob Bova, believes the election will affect the economy, if at all.

The end of the third quarter is behind us and the S&P 500 is up 7.84% year to date. Many sources believe the stock markets like certainty, and are claiming the election is causing uncertainty which leads to poor stock market performance. However year to date, these sources have been incorrect. 

Bob Bova is a well-educated (B.A. ‘67 & M.B.A. ‘81) businessman and the founder of Moneywatch (1980), Computer Stores (1980s), real estate & indoor tennis clubs (1980s & 90’s), a stock market investor (since leaving the Army in 1964) and a financial/investment professional (since 1968). He finds this Presidential Election season the most surprising and exhilarating of his life. Career politician vs. businessman. WOW!

Some recent headlines…

Trump vs. Clinton: Recession vs new jobs – according to Oxford Economics & CNN Money

Moody’s: Clinton will make economy ‘stronger’ vs. Trump - Moody’s Analytics & CNBC.com

Trump vs. Clinton: Which Party Is Better For The Economy? Forbes. Answer Democrats!

You either love the politician and despise the businessman or vice versa, but the electorate will make the ultimate decision and until then all media outlets will continue to try and predict the outcome.

Helmut Norpoth, a State University of New York at Stony Brook political science professor, predicted in early 2016 that Donald Trump ‘has a 97% chance of defeating Hillary Clinton and a 99% chance of defeating Bernie Sanders in the general election.’ This professor’s prediction model has worked for every presidential election since 1912, with the notable exception of the 1960 election, correct 96.1% of the time. “Trump beats Hillary 54.7 percent to 45.3 percent (of the popular vote). This is almost too much to believe.” This primary model predicts a Trump victory with such certainty due to Trump’s relatively high success in the Republican primaries.

Now, here is a look at past stock market performance under several presidents…

In closing, Bob’s professional opinion is that neither candidate nor party will have much influence on the economy or stock market.  Adam Smith’s ‘invisible hand’ will rule as it has always!

(The invisible hand is a term used by Adam Smith to describe the unintended social benefits of individual actions. The phrase was employed by Smith with respect to income distribution (1759) and production (1776). This exact phrase is used just three times in Smith's writings, but has come to capture his notion that individuals' efforts to pursue their own interest will frequently benefit society more than if their actions were directly intending to benefit society. Smith may have come up with the two meanings of the phrase from Richard Cantillon who developed both economic applications in his model of the isolated estate. [1] From Wikipedia, the free encyclopedia)

Thanks for your continuing confidence and don’t forget to vote.

Past performance is no guarantee of future results. The opinions expressed are those of Moneywatch Advisors, Inc. and are no guarantee of the future performance of any particular fund. This information is for educational purposes only and is not intended as investment advice. Please consult your financial advisor for more detailed information or for advice regarding your individual situation.​​