Buying stock is buying a stake in a company’s future earnings stream. The longer that expected stream, the more investors pay for it. The Fed has told us that the expansion ahead will be quite long. That should make stocks more valuable.
HOW DO YOU SPELL VOLATILITY?
From the market’s 2020 low made on March 23rd to its 2020 high notched on September 2nd, the S&P 500 rose 60%. That’s the good news. The bad news is that the market fell 34% in a little over a month to hit the March 23rd low. The level of volatility this year has been truly jaw-dropping and, no doubt, unnerving to many. Of course, sparked as it was by a pandemic, stock-market volatility may rightly have been the last thing on people’s minds.
In quarterly terms, the S&P fell 20% in the first quarter, rose 21% in the second, and gained another 9% in the third. That left the S&P return for the first nine months of the year at 6%.
For the same period, our US stock holdings returned 10%, continuing their dramatic outperformance for 2020. Our global stock holdings, held in our Arjuna Global Impact strategy, also did extremely well, returning about 10% vs. the MSCI World Index return of 2%.
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