The Threecap
Three things to recap this past week.
1. Investors Are Spooked
Stocks had their worst week and month since March after indices closed down on Friday. A record spike in COVID cases along with election jitters are leading to volatility last seen when COVID hit the markets earlier this year. With much of Europe implementing lockdown measures not seen since February and March, investors are fearing that the US may follow, leading to a slower economy as a result of lockdowns. For the past week, the Dow fell 6.47%, the S&P 500 fell 5.64%, and the NASDAQ fell 5.51%. Big tech sold off big after some major companies reported numbers that indicated they were priced too high. Twitter posted its slowest user growth and consequently fell 21%. Apple fell 5.6% after reporting a year-over-year decline in iPhone sales. Facebook, Amazon, Netflix, and Tesla all declined more than 5% for the week. However, Overall, investors got spooked that the record-breaking COVID cases and lockdowns in Europe would lead to the economy locking down again. Adding to that, many fear civil unrest will follow the election, coming up this Tuesday, leading to a bleaker outlook from investors.
2. Breaking Records
COVID is breaking all kinds of records in the US. The total number of COVID cases has crossed 9 million, adding an all-time high of 99,750 new cases on October 30th. They eased down to more than 89,000 on October 31st, but this entire past week had the highest average daily new cases. There are now about 46.2 million cases of COVID worldwide and about 1.2 million deaths. According to Reuters, Europe’s case count doubled in the past 5 weeks, crossing 10 million new cases. It’s the epicenter once again, as its count has surpassed the US’s case count. France, Germany, and the UK have gone under lockdown for the next month. Other European countries continue to tighten restrictions.
3. The Election
Obviously, the biggest news this week is who will get to live in the White House for the next 4 years. Historically, the Presidency and the economy have not had too much of a correlation. Markets have gone up and down under both Republican and Democrat administrations. However, Wall Street seems to believe that this election could change that. It’s no question that these past 4 years have been unique under Trump, with 2020 being an incredibly volatile and upsetting year. With social tensions at highs and the economic slowdowns brought on by COVID, this election does feel different. Even though Biden is ahead in the polls, 2016 has shown that they aren’t definitive and that anything can happen. The fears investors have been confirmed by the moves they’ve been making with their money. Over 60% of investors have made defensive moves, such as increasing cash. Time will tell whether or not history repeats itself and the stock market remains uncorrelated with the White House or whether or not this election is indeed different. Whatever happens, Tuesday will resolve lots of uncertainty while introducing a lot more of it.
Recent Articles
Business Structures And Their Tax Implications
American businesses are the driving force behind the capitalistic economy of the United States. They are agents of both profit and purveyance, competing for consumer money and directing their revenues back into the economy from which it originated in the forms of labor and overhead. The movement of money in and out of businesses is crucial to their solvency. Consequently, so are the ways in which the U.S. government regulates and taxes American business incomes. You may hear terms like “501(c)(3)” and “LLC” thrown around here and there and not know exactly what they mean. Our writer, Alex Weaver takes a look into the process of and ways in which U.S. businesses can set themselves up as legal entities and how that process leads to a specific tax designation.
Alternatives To Stocks
Given the recent volatility in the market, many investors have good reason to be worried about their current positions. With the upcoming elections as well as the current pandemic, there is reason for concern about the short-term performance of the stock market. If investors want to keep their money in a savings account, earning around 2%, the real value of their money will be relatively unchanged. However, there are many alternatives to putting money in a bank account. Often, these alternatives earn more than 2% annually, beating inflation. In this article, Alex Patel goes over a few of these alternative investment ideas.
Recent Podcast
In this episode, Rohan Gupta and Cassandra Ying talk to Morgan Housel, one of the most insightful and unique writers and thinkers in all of finance, about the COVID-19 market so far. We delve into topics like the stimulus, day trading, behavioral finance, history, stock market trends, and much more!
Check out the episode to learn about the COVID-19 market so far in a simplified way!
Team Member Showcase
Jason Zhang
Senior Writer
Freshman in Computer Science Engineering at the University of Washington
Daily Routine: I keep up with financial and economic news by reading CNBC, Reuters, the Washington Post, and Foreign Policy every day. When I see something that's interesting or connects to another topic we've covered, I get to work by doing more research through governmental sites, other major news sources, and occasionally the six or so economics/investing textbooks in my room. I list all the information on a document, and once I think I have enough, I write up a draft and send it to Alex. I complete any suggestions that Alex makes, and my job is done.
Why you joined StreetFins: I joined FLJ in December 2018 and stayed on when it merged with StreetFins.
Finance Tip
“You get recessions, you have stock market declines. If you don't understand that's going to happen, then you're not ready, you won't do well in the markets." - Peter Lynch