Election Season

Nicolet Wealth Management Market Update

Thank you for your continued confidence in Nicolet. As the COVID-19 pandemic continues to create uncertainty in our lives, we will work hard to provide you with timely insights on market and economic conditions.

September marked both the end of summer and the end of the strong initial gains experienced from the reopening of the economy.  The S&P 500 Equity Index, which includes nearly all of the largest publicly traded stocks in the U.S., finished down 4% for the month giving back some of the gains from a very strong August.  The bond market finished flat for the month.

Recent data suggests that economic growth has slowed considerably.  COVID-19 outbreaks have continued to impair commerce and negatively impact employment.  The unemployment rate has fallen from the April 2020 peak level of 14.7% down to the current 7.9%, but still remains elevated and near the levels last seen during the 2008 recession.  We still have over 25 million Americans claiming some form of unemployment benefits and lawmakers actively negotiating a potential $2 trillion economic relief package.

As the month of September and the third quarter of 2020 conclude, we are now less than 30 days away from the U.S. Presidential election.  This election may be one of the most contentious and consequential in modern history.  However, in terms of market implications, history suggests that the political party in office has limited significance on market returns.  Further, history shows that long-term minded investors have done well regardless of who is president.  Looking back over the last 100+ years, a portfolio that was invested 60% stocks and 40% bonds, would have earned an annual return of 8.4% when a Democratic president (65 periods) was in office, which is only slight higher than the 8.2% earned when a Republican president (94 periods) was in office.

S & P 500 Annualized Returns by Administration

Consistent with the chart above, the average four year return on the S&P 500 following a presidential election has been over 9%.  Politics are just one of many variables that ultimately determine market returns.  Regardless of the outcome, the resolution of a highly uncertain election should support the equity market.

While it is impossible to know with certainty what the 2020 election will mean for the markets, especially amidst a global pandemic, Nicolet Wealth Management continues to maintain a disciplined long-term approach and is prepared for a range of potential outcomes.  If you would like to discuss your account in more detail, please contact us at your convenience.

Nicolet Wealth Management

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Nicolet Wealth Management is a brand name that refers to Nicolet National Bank and certain of its departments and affiliates that provide investment advisory, trust, retirement planning and insurance services.

Nicolet Advisory Services, LLC, is an investment adviser, registered with the U.S. Securities and Exchange Commission, and an affiliate of Nicolet National Bank.  Nicolet Advisory Services, LLC recommends the brokerage and custodial services of TD Ameritrade, Inc., member FINRA/SIPC.  TD Ameritrade is not affiliated in any way with Nicolet National Bank or its affiliated companies.

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