Third quarter earnings are now being reported. It is still early in the season, but indications are that most will be better than recent expectations. Also, estimates for worldwide economic decline have been raised to not being as bad as previously thought. Better earnings, less economic decline, no wonder our stock market is doing so well!
Certainly, it is still an economy and stock market of haves and have-nots. Some businesses are doing very well while others, through no fault of theirs, are struggling to survive. This is exactly why the Bull believes there needs to be another round of fiscal stimulus. Whether we get one or not, or the timing, are all unknown. There will be a recovery without one, but it will be far broader and robust with additional support for the businesses and workers most hurt by the enforced shutdown.
In constructing portfolios for the near future, a lot hinges on additional stimulus. Not knowing the answer requires a broad-based strategy of including companies that are on both sides of the economic divide; some that are benefiting now and others that will do well if growth picks up. This is not an optimal strategy but necessary until more is known. Stay steady, my friends.
El Solo Toro