Election > Rona

For the market, the election is a much more important event than the ongoing Corona 2nd wave.  France, Germany, and now UK has gone back into partial lockdowns, but its not really as scary as the headlines make it.  Closing bars and restaurants that were probably either losing money or barely breaking even under the reduced customer traffic having to close down isn't a negative.  It probably is a net positive for small businesses to be able to receive government bailouts while they are closed instead of struggling to make money under bad conditions.  

And if this year taught us anything, its not the economy that really matters, its the reaction to the economy from the government and central banks that matter.  And this 2nd wave assures that the ECB and the Fed will probably be pulling out even more ammunition in December, and then if we get a Democrat sweep like the betting markets are forecasting, then you'll get that big fiscal stimulus which will be front run by the markets.  

While I was wrong about how far up we would go from the March bottom, that move was a strong signal that there was a lot of underlying buying power in stocks, and a crowd that was looking to speculate and take risk.  At an extreme, that can lead to a long term top, but when it is at a moderate level and rising, stocks usually go higher.  The last 2 months after the early September top have decreased investor speculation and optimism enough so that this market has room to go back up for 2-3 months without positioning getting too long.  

The somewhat panicky selling that occurred Friday after AAPL and other tech earnings disappointments may have been the final dump before the event.  With the election uncertainly likely to be gone by Wednesday, a market that is prone to speculation and a crowd that is now looking to buy means that we should be seeing a lot of risk being put on after the election results come out, no matter the outcome.  Of course, a definitive victory for the Democrats would be a more risk positive outcome because it all but guarantees a huge stimulus package when Biden gets into office, but even a Trump win would still mean a lot of stimulus would get passed, as even with Trump in office, Congressional Democrats will be looking to spend.  

Really the only black swan would be a contested election where the race is very tight, but I give that very low odds just because of the big lead that Biden has, and even if Trump declares victory when the outcome has yet to be decided, the market will see right through it and wait for the results to confirm either way.  

The amount of angst over this election seems greater than what I've seen in any election, including 2016, which really doesn't make much sense because this election from a polling perspective is the most lopsided one since 1996, and probably the most predictable.  We'll soon find out in 2 days.  

Put on longs late last week, and will hold it for a while.