Three Investment Ideas in Front of the Election

Plenty of pollsters and pundits are speculating about the outcomes of the November elections in the U.S. and chancing a guess over how to position investments based on their prophecies. Rolling the dice with your wealth based on this (or any) election is a fool’s game. Managing risk is what matters.

We’ve heard certain prophets state that the stock market is at “nosebleed” levels and that the party is over, and the “hangover” is now. There are and always will be risks to investing in anything, but we are taking the chance to highlight what we believe to be unnoticed opportunities. Yes, the U.S. stock market has gone up and gone up fast, but that is thanks to a few massive technology stocks, dubbed the FAAANM (Facebook, Amazon, Apple, Alphabet, Netflix, Microsoft). Strip out those 6 stocks and the S&P 500 is down year to date versus up.

The chart below illustrates the divergence in the period for 2020 through September 2020. The blue line is the S&P 500, notching a 5.9% gain, but the six FAAANM names, in red, are up 46.9% during the same period. The remaining 494 stocks in the benchmark index are still in negative territory.

Past performance is no guarantee of future results. Source: Standard & Poor’s

Investors cannot directly invest in an index and unmanaged index returns do not reflect any fees, expenses or sales charges.