Investment Climate October 2020

 



Stocks continued the march toward recovery in the third quarter and turned positive for the year - a feat that just a few months earlier would have been thought to be nearly impossible.  Clearly, markets overreacted to the COVID panic, given the severity of the downturn, and have now largely corrected that overreaction.  The outperformance in our growth strategies continued in the quarter, and the performance continued to be very broad-based.

While we have always believed the path to investment success involves constant evaluation of the businesses in which we are invested, rather than the general market (including the individual market prices of the companies we own), the current environment of hyper-volatility and excessive fear makes it even more crucial to take that approach.  Simply put, in times of extreme uncertainty, value migrates towards real, sustainable business models, and we believe the fact that we take extreme care in seeking out and investing in such companies is the reason for our considerable outperformance over time, especially more recently.

The upcoming election has many investors concerned.  We believe there are important issues being addressed and the choices offer some stark differences, at least in rhetoric.  We believe that the importance of maintaining a thriving, healthy, free-enterprise system is necessary in order for the economy to continue its recovery from the COVID 19 fiasco, and investors would be wise to pay close attention to any policies that serve to thwart that system.  However, it is also important for investors to consider that in the system of representative government in which the U.S. economy operates, significant change is incremental and difficult to inflict any other way but marginally.  In our view, barring a government takeover of a significant portion of private business (obviously an extreme and unlikely action regardless of the election outcome), it is likely to be business as usual post-election.

The modern stock market, which is so driven by algorithmic trading, is marked by bouts of extreme volatility.  This is simply a fact of life in the public markets and is here to stay.  For those who have a business-based focus on public company investing, this should not be a deterrent, because such investors can take advantage of extreme valuations, in either direction, to appropriately rebalance portfolios.  This is an approach we take and will continue to do so.  We are encouraged by our recent performance and while corrections are to be expected, we believe the portfolio is very well positioned in the most important companies driving innovation in the world today.






Disclosures: Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Taylor Frigon Capital Management LLC (“Taylor Frigon”), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Taylor Frigon. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Taylor Frigon is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Taylor Frigon’s current written disclosure Brochure discussing our advisory services and fees is available upon request. If you are a Taylor Frigon client, please remember to contact Taylor Frigon, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services.