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Weekend reading: Markets rise/fall on Biden/Trump victory/defeat (!)

What caught my eye this week.

Leave aside the existential horror of watching the former leading nation of the free world look ever more like it’s LARP-ing [1] its way through the decline and fall of the Roman Republic, and from a market-watcher’s perspective the US elections have been quite entertaining.

I’ve especially enjoyed the narratives used to explain the gyrations in share prices as the drama has unfolded.

As markets fell in October we were told investors were pricing in a Biden victory. Indeed, a ‘blue wave’ was about to seize the levers of power.

“All those juicy tax cuts will be reversed! Regulation will resume! Sell equities!”

Then as the market rose around election day we heard investors foresaw a huge spending spree by Democrat president Biden. Shares rose in anticipation, apparently.

“Mo’ stimulus, mo’ gains!”

But then Trump seemed to do be doing better than expected – and markets kept going up anyway. Oh, that was because supposedly investors love a gridlocked Washington.

“It all leaves politicians unable to do anything to upset the applecart / gravy train!”

But why were tech stocks rallying the most? Um, that was because the US Federal Reserve would have to keep rates lower for longer in an uncertain and undecided America.

“TINA 2.0: There is no alternative!”

At least when you go to a fortune teller you get a cup of tea.

Donald ducked

The reality is all this and more was being priced-in, every second. Not to mention the fact global markets had fallen 5-10% in previous weeks and to some extent were probably just retracing their losses as shares changed hands from weaker nervous investors to those happier to take their lumps.

My own pet theory is President Biden is far more likely than Trump was to try to get Covid by the throat in the US and strangle it. In the short-term that could mean a slower recovery and more government borrowing and money printing. All good for technology and growth stocks.

But who knows? The key point is narrative follows price action – at least by the time it reaches the masses. Not the other way around.

Have fun with the pundits if you must (I do) but be wary of taking any of it too seriously.

As my co-blogger said last week [2]:

The market is the consensus of expectations on the future of a stock. Only unexpected events can shift the price. How can you predict the unexpected?

The short answer is: you can’t.

Have a great weekend.

From Monevator

Portfolio tracking: how to track your investments using a money-weighted return – Monevator [3]

From the archive-ator: Using the rule of 300 to estimate how much money you need for financial freedom – Monevator [4]

News

Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!1 [5]

Rishi Sunak to extend furlough scheme to end of March – BBC [6]

Covid help extended for self-employed people, but some miss out – Guardian [7]

Pressure grows to support the excluded self-employed [Search result]FT [8]

House prices rose 7.3% year-over-year in October, says Halifax – Moneyfacts [9]

Interactive Investor [10]:Well-off middle-aged workers have increased pension contributions by 35% in the Covid crisis – ThisIsMoney [11]

 

A terrible, horrible year for quants: Is factor investing broken? [Search result]FT [12]

Products and services

Where for art thou Bitcoin ETF? – ETF.com [13]

We both get £50 to invest at Seedrs if you sign-up via my link [14] and invest £500 – Seedrs [14]

Covid payment holidays on credit cards and loans extended by six months – Which [15]

The green case for replacing gas central heating with electric – ThisIsMoney [16]

When designing ESG model portfolios, research teams must tackle due diligence and definition dilemmas – CityWire [17]

Sign-up to Freetrade via my link and we can both get a free share worth between £3 and £200 – Freetrade [18]

Battle of the £1,000 hampers (but it is much cheaper if you do it yourself) – ThisIsMoney [19]

Homes for sale in historic buildings – Guardian [20]

Comment and opinion

Missing: Career – Indeedably [21]

Try not to slip – Humble Dollar [22]

The case for spending on experience over stuff – Evidence-based Investor [23]

Who cares? – The Irrelevant Investor [24]

Stock markets are like babies – Axios [25]

How one woman created a £1 million business on furlough in lockdown – ThisIsMoney [26]

Half a life ahead – The Retirement Field Guide [27]

When the siren song of market timing is loudest – A Wealth of Common Sense [28]

The term ‘wellness’ is sweeping the US financial services industry – RIABiz [29] [via Abnormal Returns [30]]

Naughty corner: Active antics

Don’t give up on a small cap value factor tilt – Humble Dollar [31]

Sold: Dunelm’s share price is too high for my liking – UK Value Investor [32]

The dim glow of the UK stock market [Search result]FT [33]

Secretly, insiders are likely promoting their companies on Seeking Alpha. But it barely moves markets – Institutional Investor [34]

A final wrap-up of the Covid-19 market – Musings on Markets [35]

Covid-19

Following reader feedback [36], could all Covid thoughts please go on this older thread [37]. Today’s comments are for investing discussion. Covid mentions will probably be deleted. Thanks!

I didn’t expect a big second wave, so I have to eat humble pie. But I still believe the social, economic, and wider health consequences of lockdown are under-estimated. Certainly for me a national lockdown is a last resort, yet we seem to have been bounced into it by Johnson’s political woes in the North. Cases may already be plateauing – but any imminent decline will (again) be chalked up to national lockdown. Thoughts over here [37] only. (Ta!)

Cases were falling in 19 out of 32 London boroughs before lockdown… – ES [38]

…and infection levels may be ‘stabilising’ across the UK – BBC [39]

Indeed one authority has the UK R value at 1.0… – Covid symptom Study [40]

…or is it 1.6? [Slightly earlier period though]Imperial [41]

T-cell response ‘lasts six months after Covid infection’ – BBC [42]

SAGE model’s over-estimation of deaths – CEBM [43] and Financial Times [44]

Lockdown averse Sweden is tightening restrictions on rising cases – Fortune [45]

Nearly half of Slovakia’s population took a Covid test on Saturday – Reuters [46]

Czech Republic goes full Trump with Covid, gets crushed by second wave – Daily Beast [47]

IFR c.1% in high-income countries but far lower in poorer, younger ones – Imperial [48]

How the Coronavirus hacks the immune system – The New Yorker [49]

Is a dangerous new Covid strain circulating in farmed mink? – New Scientist [50]

Politics

Watchdog warns of ‘significant’ post-Brexit border disruption – BBC [51]

Biden risks being a lame duck president [Search result]FT [52]

Trump begins his campaign to turn the US into a dime store banana republic – Twitter [53]

All the false claims in that one Trump speech catalogued – Guardian [54]

Marina Hyde: What to do when your president has a temper tantrum – Guardian [55]

Keep on keeping on in lockdown mini-special

How to stay creative when life feels monotonous – Harvard Business Review [56]

Six energy-boosting tips to combat pandemic fatigue – Fast Company [57]

How to make and eat a tuna melt – Guardian [58]

Kindle book bargains

Don’t have a Kindle? Get one [59] – they’re great and save a ton of space.

The Everything Store: Jeff Bezos and the Age of Amazon by Brad Stone – £0.99 on Kindle [60]

Happy Money: The Japanese Art of Making Peace with Your Money by Ken Honda – £0.99 on Kindle [61]

Secrets of the Millionaire Mind by T. Harv Eker – £1.99 on Kindle [62]

The Finance Book: Understand the numbers by Stuart Warner – £4.19 on Kindle [63]

Off our beat

Cheap, clever, five-minute home improvements – Guardian [64]

Escape rooms in the at-home era – New York Times [65]

The problem with leaving London – The Spectator [66]

The rise of platonic co-parenting – Guardian [67]

And finally…

“He allowed himself to be swayed by his conviction that human beings are not born once and for all on the day their mothers give birth to them, but that life obliges them over and over again to give birth to themselves.”
– Gabriel García Márquez, Love in the Time of Cholera [68]

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  1. Note some articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”. [ [72]]