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Third Quarter 2020 Executive Summary

Quarterly Executive Summary

“I wish it need not have happened in my time,” said Frodo.  “So do I,” said Gandalf, “and so do all who live to see such times.  But that is not for them to decide.  All we have to decide is what to do with the time that is given us.”    J.R.R. Tolkien, Author, The Fellowship of the Ring

One need only watch the daily news to be reminded of the unparalleled challenges facing our world.  These are difficult times, and much is outside of our control   All we have to decide is what to do with the time that is given us.  We need to focus on what we can control and ask ourselves …  How can I manage the impact of these challenges and live my best life?    

From an investment perspective, our advice hasn’t changed … stay the course; however, we feel it equally important to offer this advice:  Stay well, but don’t stop living, and take care of your health – physically and emotionally.  Eat well, exercise and get plenty of sleep.  Make time to unwind, take breaks from the news and avoid chaos.  You can keep connected with your family, friends, and community while social distancing.  Consider regular “together time” via the phone, on-line or through social media.  Be creative.   Enjoy your own backyard.  Make technology work for you by taking advantage of the myriad of apps available to help with fitness, stress relief, and staying in touch. Focus on the positive and always be grateful.  

Reflecting on Q3, the economy continued its recovery with mostly positive economic data.  The COVID-related recession was painfully sharp, but mercifully short; however, the timeline for full recovery is uncertain and may be slow and bumpy. U.S. equities continued to advance, with the S&P hitting an all-time high in August.   U.S. household net worth reached its highest level ever during Q3, taking just one quarter to recover from Q2’s disastrous declines.   Alternately, it took nearly five years for the aggregate U.S. household balance sheet to recover to pre-crisis levels following the 2008/2009 Great Financial Crisis.  And while equities are pricey, based on traditional valuation methods, stocks remain attractive -- particularly when dividend yields exceed long-term government bond yields.  We expect slower growth for the remainder of the year with continued (or potentially increased) market volatility, especially with the upcoming election.  

And speaking of the election …  There is no shortage of opinions on the election’s economic impact.  Yes, elections are stressful for markets -- but the risk is short-term.  Historically speaking, the political power structure in Washington has no significant impact on equity markets in the long-term.  Elections do matter, greatly.  Choosing who will serve our great nation is a privilege that should never take for granted.  But predicting the winner and speculating at the ensuing impact on the economy is probably not a good use of time – rather, stick with a long-term plan that keeps you on the right path in any case. 

Looking forward, we expect continued recovery (albeit more gradual) as the reopening continues.  The pandemic-related disruptions will persist until there is a widely available medical resolution.  Even then, the full impact (combined with other social, political, and geopolitical issues facing the country) remains uncertain.  Federal Reserve chair, Jerome Powell, recently told a congressional panel that America’s economy has shown “marked improvement” since the pandemic’s extraordinary downturn while noting that “the path ahead continues to be highly uncertain.”  “Our economy will recover fully from this difficult period,” he said. “We remain committed to using our full range of tools to support the economy for as long as is needed.”

We continue to wish you well, and as always, we are here for you.  Please contact us if you would like to schedule a time to further discuss.  Your peace of mind is paramount.  

Recent Economic Data: 

Gross Domestic Product (GDP).  The GDPNow model’s latest estimate (October 1, 2020) for real GDP growth (seasonally adjusted annual rate) in Q3 2020 is 34.6%, recouping Q2’s unprecedented plunge of -31.4%, resulting from the response to COVID-19.  

Unemployment.   The unemployment rate declined for a fifth consecutive month in September, to 7.9% (down from 11.1% in June), as the nation continued to resume economic activity curtailed by the pandemic.   Prior to the pandemic the unemployment rate reached a 50-year low of 3.5%.

Consumer Confidence.  The Conference Board Consumer Confidence Index (an indication of consumer attitudes and buying intentions) surged in September after two negative months and now stands 101.8 (1985=100).  This reflects an increase from Q2 (98.1) but is well below February’s pre-pandemic level (132.6).  

Consumer Price Index (CPI).  The CPI for All Urban Consumers (a measure of inflation which shows “cost of living” fluctuations) increased 0.4% in August on a seasonally adjusted basis, after rising 0.6% in July, and for 12 months, the index increased 1.3% before seasonal adjustments.  

Earnings.   The earnings outlook has been steadily improving as business activities resume.  For Q3 2020, the estimated earnings decline for the S&P 500 is -22.2%, revised from the June 30 estimate of -25.4%

Housing.  Q3 saw continued strength in the housing market fueled by low mortgage rates and the pandemic-related shift to working from home.  August home sales increased by 8.7% over July (a record since National Association of Real Estate began keeping data in 2001).  Existing home sales, which represent the bulk of U.S. home sales, were up 10.5% on a year-on-year basis.  Privately-owned housing starts in August were up 2.8% above the August 2019 rate. 


September 30, 2020

Q3 Return







S&P 500



We are committed to serve you with the highest standard of care in keeping with our corporate mission of 

Building Relationships … Enhancing Lives

Executive Summary Sources:













The views expressed represent the opinion of Asset Management Financial Solutions, Inc. (“AMFS”) and are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and AMFS’s view as of the time of these statements.  Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties.