In Observance of Thanksgiving Hudock Capital Group LLC will be closed Thursday, November 26th 2020 and will close at 1 P.M. Friday, November 27th 2020

FROM OUR DESK

Counting our Blessings November 25, 2020
Downloads: 2020-Thanksgiving.pdf

Every year, we expect certain things to happen around Thanksgiving.  We expect the leaves to change colors.  We expect to decorate our houses with pumpkins and cornucopias.  We expect football on television.  We expect to eat turkey and stuffing, potatoes and gravy.  We expect our family to gather from near and far.

But the coronavirus pandemic – and all of 2020, really – has turned our expectations upside down.  This year, many of us will not be able to see our parents, grandparents, or other relatives. Those who have lost their jobs may not have the means to enjoy the kind of feast we’re accustomed to.

Most of us have never experienced a Thanksgiving like this one before.  That’s because most of us have never experienced a year like this.

And yet, it’s precisely during a time like this that Thanksgiving becomes more important than ever.  Because, it’s when life takes certain things away that we realize what truly matters.  When we learn to live without certain comforts, we learn what we couldn’t live without.  We learn what we really have to be thankful for.

Let us tell you: There are so many things we are thankful for.

First and foremost, we’re thankful for our family.  Not being able to see certain loved ones as often makes us realize how much they mean to us.  This year, we have treasured every email and letter, Zoom® session and phone call, more than ever before.

Second, we’re thankful for the technology that enables us to connect with our families, even when we’re hundreds of miles apart, or simply separated due to social distancing.

Third, we’re thankful for our amazing team.  Their dedication, professionalism, and attitude inspires us every day.  When the markets were crashing, they were on the phones, working hard to reach every client we have.  When the lockdowns started, they worked from home without skipping a beat, working to take care of you even while they took care of their own families.  We do what we do because their hard work empowers us to.
Fourth, we’re thankful for life’s daily luxuries that we too often take for granted.  Can you imagine going through this pandemic the way people would have hundreds of years ago?

The pandemic has reminded us just how accustomed we are to always having food, always having water, always having power, always having shelter.  In the 21st century, we have books and games and movies to keep our minds occupied.  We have pets to keep us company.

Let’s face it, this pandemic has even reminded us how much we take toilet paper for granted. Toilet paper!

As difficult as it is to live with COVID-19, the modern world makes it easier than past generations could have imagined.  And we’re grateful for that.

Fifth, we’re thankful for the men and women striving to end this pandemic.  The doctors and nurses on the front lines, caring for the sick.  They are literally putting their lives on the line, working from sunup till sundown.  All to save lives and to reunite families.  And let’s not forget the scientists and researchers, racing against the clock to deliver the world a vaccine in record time.  We could never do what they do.  We’re so thankful they’re doing it.

Sixth, we’re thankful for the members of our community who keep our community functioning.  From teachers to police officers.  From grocery store baggers to truckers.  From utility technicians to sanitation workers.  Many are working double shifts.  Others have converted their offices into makeshift bedrooms.  Too often, their work goes unnoticed and unsung.  But they are considered essential workers for a reason – because none of us could live without them.

Finally, we’re thankful for you.  When the pandemic began, our team tried to reach as many clients as possible.  Not just to talk about your investments, but to talk about you. To see how you and your family were doing.  But very soon, we realized we didn’t have to call each of our clients.  That’s because most of our clients were calling us!  Not to ask about the markets.  Not to ask about their money.  But to ask about us.  To check in on us.  To express their appreciation for us.

There is never a day that goes by where we are not thankful for what we do – because of who we do it for.

This pandemic has changed so much.  How we live, how we celebrate.  But there are some things it hasn’t changed.  It hasn’t changed what we care about.  It hasn’t changed who we love.

It hasn’t changed how much we have to be thankful for.

On behalf of our entire team, we wish you and your family a safe and joyful holiday season.  Happy Thanksgiving!

Sincerely,

Barbara B. Hudock CIMA®, CPM®
Chief Executive Officer
Founding Partner

Michael J. Hudock, Jr., CPM®
President and Founding Partner
Wealth Consultant

Riverfront November 16, 2020
Downloads: Riverfront-Nov-16-2020.pdf

Election Outcome Likely Better for Stocks than Bonds

Written by RiverFront Investment Group.  Reprinted with permission from RiverFront Investment Group.  Redistribution is prohibited.

We Salute Our Veterans November 10, 2020
Downloads: Veterans-Day-Letter-2020.pdf

The Highest Honor

On Veteran’s Day we pay tribute to the men and women who have worn the uniform of the United States Armed Forces. We pay tribute to all levels of sacrifice—from the cook, to the soldier who gave up his/her life in defense of our freedoms. All are important to us.

As we think about the sacrifices of our armed forces we recollect the importance of the Medal of Honor and the symbolic tribute paid by the Tomb guards at the Tomb of the Unknown Soldier.

The highest military decoration awarded by the U.S. government is the Medal of Honor. It is awarded to members of the armed forces who illustrate, “conspicuous gallantry and intrepidity at the risk of his or her life above and beyond the call of duty while engaged in an action against an enemy of the United States.” (1)

One soldier who exhibited such courage was Audie Murphy who at the age of 17 enlisted in the United States Army because he wanted to make something of himself. On January 26th, 1945 the company Audie commanded came under attack by six tanks and various waves of infantry. 2nd Lt. Murphy ordered his men to withdraw to the woods, while he remained in a forward position to give fire directions to the artillery by phone.

After the enemy realized his position he climbed into a burning tank, at great peril to himself. He was exposed to gunfire from 3 sides, was alone, and in a burning tank that could blow up at any moment. He employed the .50 caliber machine gun causing the attack to waiver, and in turn pushed the enemy tanks back. The Germans continued to try for an hour to kill Audie.

During the fire fight, he received a leg wound and continued to fight until ammunition was exhausted. He then made his way back to his company, refused medical attention, and organized his company to counterattack the Germans who withdrew their forces.

His single act of courage saved his company from possible encirclement or destruction, and allowed the company to hold the woods, which was the German’s objective. (2)

By the end of World War II, he was the most decorated U.S. soldier, having earned every medal his country could give, including the Medal of Honor. If the name Audie Murphy sounds familiar, it’s because after the war he also became a famous movie actor, author, and has his name on the Hollywood Walk of Fame.

Audie’s show of gallantry was not an isolated event. The U.S. has given over 3,460 Medal of Honor awards with 19 men receiving the award twice. Fourteen of these men received two separate medals for two separate actions; five received both the Navy and the Army Medals of Honor for the same action. Over 600 received the award posthumously. The most medals earned in a single war was during the Civil War with 1,522 awarded. (3) The Medal of Honor is properly described as having been “awarded”, “earned”, or “received”, not “given” or “won.” (4)

Tomb of the Unknown Soldier

As a country, we go to great lengths to make sure that those who lived and served, and those who died while serving are remembered and honored. At the Tomb of the Unknown Soldier the Tomb Guard symbolically gives another one of the highest military honors, but to the “Unknown Soldiers.” During a Tomb Guard’s watch, the soldier marches 21 steps down the black mat, turns, faces east for 21 seconds, and turns, faces north for 21 seconds, then takes 21 steps down the mat and repeats the process. Twenty-one was chosen because it symbolizes the 21-gun salute. (5)

During Hurricane Isabel in 2003, with winds that turned over vehicles, downed trees, and turned debris into projectiles the Regimental Commander of the U.S. infantry sent word to the nighttime Tomb Guards to secure post and seek shelter. They disobeyed the order. Their important watch continued as normal. Soaked to the skin, marching in the pelting rain, they said that guarding the Tomb was not just an assignment; it was the highest honor that can be afforded to a service person. The tomb has been patrolled continuously, 24/7, since 1930. (6)

The Medal of Honor award winners, and the Tomb of the Unknown Soldier represent the deep gratitude our country feels about our military service members willing to give his/her life. But, even these significant acts of gallantry don’t dampen the gratitude we have for all our military personnel willing to serve their country. Happy Veteran’s Day!

Sincerely,

Barbara B. Hudock CIMA®, CPM®
Chief Executive Officer
Founding Partner

Michael J. Hudock, Jr., CPM®
President and Founding Partner
Wealth Consultant

(1) http://en.wikipedia.org/wiki/Congressional_Medal_of_Honor

(2) http://www.cmohs.org/recipient-detail/2907/murphy-audie-l.php

(3) http://www.history.army.mil/html/moh/mohstats.html

(4) http://www.segtours.com/blog/archives/347

(5) http://www.arlingtoncemetery.mil/ceremonies/sentinelsotu.html

(6) http://www.freerepublic.com/focus/f-vetscor/1126293/posts

Riverfront November 9, 2020
Downloads: Riverfront-Nov-9-2020.pdf

Our Three Tactical Rules Suggest Staying Overweight Stocks

Written by RiverFront Investment Group.  Reprinted with permission from RiverFront Investment Group.  Redistribution is prohibited.

Riverfront November 2, 2020
Downloads: Riverfront-Nov-2-2020.pdf

Election Outcome 2020: Already Playing the Hand We Have Been Dealt

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Riverfront October 26, 2020
Downloads: Riverfront-Oct-26-2020.pdf

What if the Stock Market is Right?

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Elections and the Markets October 21, 2020
Downloads: Elections-and-the-Markets-2020.pdf

ELECTIONS & THE MARKETS

It’s that time again!  Every four years, Americans participate in an election to choose the next President of the United States.  Under normal circumstances, voting is a simple, uncomplicated act—but the months preceding it are anything but—and this year is no exception.  After all, before we vote, we first have to endure the dreaded “campaign season.”  From endless television commercials to the plethora of yard signs, “politics” seems to become the order of the day.

If you’re like us, you probably don’t enjoy all the campaigning.  But you also know how important the political process is.  Being an informed, engaged citizen is crucial to maintaining the stability of our Republic.  That means asking some pretty tough questions.  And, getting the answers can be both frustrating and time-consuming.

Fortunately, there’s one question you don’t have to ask.

“How will the election affect the markets?”

This is a question we get every four years.  And the answer is always the same:

Not much.

Since 1957, the S&P 500 has gained an average of roughly 9.8% every presidential election year.1  Of course, there can be some massive exceptions.  For example, in 1928, the S&P rose over 37%.  In 2008, it fell over 38%.2

There is a danger, however, in using averages to try to predict what will happen.  Take the “Presidential Election Cycle Theory” for instance.  Once upon a time, many people believed that U.S. stock markets are always the weakest in the year following a presidential election.  This was the case for Franklin Roosevelt.  It also held true for Truman and Eisenhower.

But in George H.W. Bush’s first year, the S&P 500 rose 27%.  In Bill Clinton’s first year, it rose 7%.  Barack Obama’s first year saw a 23% rise.  Donald Trump’s first year was 19%.

It’s clear that the “Presidential Election Cycle Theory” just doesn’t hold water.  And that’s true for actual election years as well.  An average merely shows you what has happened, not what’s going to happen.  (Side note: this is why you often see the financial industry emphasize that “Past performance does not guarantee future results.”  Because it’s true.)

“But what if the Democrats/Republicans win?  Won’t that have an effect?”

That’s the next question we get every four years.  Our answer:

Not really.

Don’t believe us?  Let’s see what markets have done over the past 50 years.  Below are the last eight presidents of the United States, with their political party next to their name.  (We’re skipping Ford as he took office in the middle of Nixon’s second term.)  The third column shows how the S&P 500 performed.(You might want to cover the third column and try to guess the result—you may be surprised).

President Party Markets Up or Down?
Richard Nixon (1st term) Republican -11.36%
Richard Nixon (2nd term) Republican -17.37%
Jimmy Carter Democrat -11.5%
Ronald Reagan (1st term) Republican -9.73%
Ronald Reagan (2nd term) Republican +26.33%
George H.W. Bush Republican +27.25%
Bill Clinton (1st term) Democrat +7.06%
Bill Clinton (2nd term) Democrat +31.01%
George W. Bush (1st term) Republican -13.04%
George W. Bush (2nd term) Republican +3.0%
Barack Obama (1st term) Democrat +23.45%
Barack Obama (2nd term) Democrat +29.6%
Donald Trump Republican +19.42%

If a hypothetical investor had followed the “Presidential Election Cycle Theory”, he or she would have missed out on some of the biggest gains in market history.  The same is true if that hypothetical investor had made decisions based on politics.  For example, an investor that didn’t want to invest during a Democrat administration would have missed out on the market performance of Clinton’s second term.  Just as an investor that didn’t want to invest during a Republican administration would have missed out on the market performance during Reagan’s second term and the first Bush term.

As worked up as we often get about our political beliefs, neither party tends to have that much impact on the markets compared to the other.  Historically, the S&P 500 has gone up 10.8% under Democratic presidents, and 5.6% under Republican presidents.Either way, the markets go up over time.  That’s because the markets are driven by far more than just one person or event.

Obviously, it matters a great deal who our president is … but not when it comes to the markets.  And that’s a good thing!  Here’s why:

1.  The Founding Fathers created a system of government where no branch (executive, legislative, or judicial) was supposed to dominate the other. The fact that neither political party, nor election years in general, have that much influence on the markets shows that our system of checks and balances extends to investing, too.
2.  Again, the markets are driven by far more than just one person or event. They’re controlled by the ebb and tide of trade, by the law of supply and demand, by innovation and invention, by international conflict and consumer confidence. The markets are like life. The course our lives take isn’t determined by one gigantic decision, but by the millions of small decisions we make every day.

We don’t know about you, but we find that comforting.

So, what’s the takeaway from all this?  The takeaway is that when it comes to investing, we control our own destinies, not politicians.  The way to reaching your financial goals is by having a sound investment strategy, making informed decisions, and taking emotion out of it.  Not by worrying about the election.

Sure, campaign seasons can cause short-term market volatility and any pre- or post-election uncertainty can too.  Yet we know that making emotional decisions during periods of volatility can lead to bad results and that the best decision is often not to act in the face of market volatility.  Why? Because it is so unlikely that we can perfectly time the market.

We also know that campaign seasons involve a barrage of information with often conflicting or negative news stories.  When these stories are repeated over and over, they sometimes affect our ability to think independently, and may cause us to lose our focus on the long term.  As we stay informed, we should try to avoid overexposure to the media, particularly when a news cycle repeatedly focuses on the same negative events.  Everything in moderation, including the news.

So, yes watch the debates, chat amongst your friends, and decide who you want the next president to be.  Do so with the knowledge that whatever happens, the markets will go their own way … and so will you.  Regardless of the direction that you or this election takes, rest assured that your financial plan anticipates periods of volatility, that the disciplined investment strategies we have implemented together aim to achieve positive performance over time, and that history is on our side.

As your Wealth Partners with Purpose, we are always here for you.  Please contact us with your questions or concerns anytime.

On behalf of everyone here at Hudock Capital, we wish you a happy (and headache free) election!

Sincerely,

Barbara B. Hudock CIMA®, CPM®
Chief Executive Officer
Founding Partner

Michael J. Hudock, Jr., CPM®
President and Founding Partner
Wealth Consultant

1 “What could the S&P 500 tell us about Trump’s reelection?” Forbes, October 21, 2020.  https://www.forbes.com/sites/greatspeculations/2019/10/21/what-could-the-sp-500-tell-us-about-trumps-re-election/#3b5151ef4664

2 “S&P 500 Historical Annual Returns,” Macrotrends, https://www.macrotrends.net/2526/sp-500-historical-annual-returns

3 “Democratic presidents are better for the stock market and economy than Republicans, one study shows,” Business Insider, August 24, 2020.  https://markets.businessinsider.com/news/stocks/stock-market-election-democratic-republican-presidents-better-performance-economy-gdp-2020-8-1029528932#

Riverfront October 19, 2020
Downloads: Riverfront-Oct-19-2020.pdf

2020 Election FAQ

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Riverfront October 5, 2020
Downloads: Riverfront-Oct-5-2020.pdf

Quarterly Review: Global Stocks add to 2Q Gains

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Riverfront September 28, 2020
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Preparing for Certain Uncertainty

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Riverfront September 21, 2020
Downloads: Riverfront-Sep-21-2020.pdf

Trump or Biden…We Will Play the Hand We’re Dealt: Part 1

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Riverfront September 14, 2020
Downloads: Riverfront-Sep-14-2020.pdf

Implications of a ‘Job-Light’ Recovery

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