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Equities Pullback From Early September Highs

September 25, 2020

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Equities pullback from early September highs


Dear Great Lakes Wealth Clients & Friends,

Investors have had a lot to process over the past week: domestic equity declines on top of global ones, the loss of legendary Supreme Court Associate Justice Ruth Bader Ginsburg and a rise in COVID-19 cases across the nation. The Dow Jones Industrial dipped almost 3% on Monday, and the S&P 500 slid more than 2% from the previous week, off about 7% from its recent highs earlier this month. Large-cap tech names, which had experienced a run up in recent months, began to drag down the broader markets this week, while the rest of the stocks generally held their ground.

The passing of Justice Ginsburg leaves an opening on the Supreme Court late in an already-contentious presidential election cycle – potentially ushering in a partisan political battle, as well as a shift in the electoral landscape.

The Federal Reserve continues to do its part to provide liquidity to the financial system, but another round of government assistance might be hindered by political division ahead of the election with a Supreme Court vacancy in the balance.

September has historically been a weak month for equities. This seasonal slump combined with expected election volatility and valuations at their highest level in almost two decades could make the equity markets vulnerable through the end of the month.

We continue to view unprecedented global stimulus and record low interest rates as supportive of equities over the intermediate term. We also see short-term volatility as potential opportunity to selectively add equity to a portfolio. We tell you this to provide you with perspective as we anticipate managing through periods of market weakness over the rest of 2020. We are excited for the opportunities ahead. Thank you for your continued trust in us!

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The Investment Team at Great Lakes Wealth