From election day to Monday, November 9, the Dow1 surged 6% (1,500 points), driving a record intraday high on Monday.
The uptick was in part due to a “relief rally”2 following the presidential election. Monday’s gains – more than half of the total – were also driven by positive testing news for a Pfizer COVID-19 vaccine.
Since April 2020, our strategy for clients, as suitable, has been to let equities ride 5% high, to take advantage of what we see as the likely COVID resolution over the coming months/year. We maintained this strategy even as COVID cases increased during the past two months, creating downside volatility.
Monday’s attractive Dow results give us a sense of the “pent up demand” for positive COVID-19 news. They also underline the suddenness with which this news can come, the outsize impact it can have on the markets, and the importance of being invested to benefit.
Note that a 5% overweight in stocks, as suitable, can make a difference without adding substantially more risk.
Learn more about the stock market uptick.
Definitions and Sources
1. Dow Jones Industrial Index: an index that tracks 30 large, publicly owned companies trading on the New York Stock Exchange (NYSE) and the NASDAQ.
2. A relief rally is quite common after a presidential election. The stock market is “relieved” that some uncertainty has cleared.
Laura is a Senior Wealth Manager and the Founder of LWP. She has a master’s degree in tax and is an excellent listener. While she is a sophisticated financial planner with experience in complex issues, her priority is ensuring a financial plan works for people.