Weekly Market Commentary

September 14, 2020

 

The Markets

I think for many reasons this will be a year we’ll remember for a long time.

So far, 2020 has been memorable for many reasons, not the least of which is the speed at which some events have been occurring in financial markets. This year, we’ve experienced:

  • The end of the longest U.S. stock bull market in history
  • A global stock market crash in a four-week span
  • The shortest U.S. stock bear market in history
  • Multiple record recoveries for major U.S. stock indices

Last week, we witnessed the swiftest correction on record as the Nasdaq fell by 10 percent in just three days. By the end of the week, the Index had recouped some losses and finished down 4.1 percent. The Standard & Poor’s 500 Index and Dow Jones Industrial Average also finished the week lower.

It would be gratifying if the recent drop in share price steadied U.S. stock markets. However, we are likely to see stocks remain volatile through the end of 2020.

This is a good time to take a self-check and make sure your asset allocation aligns with your response to market volatility. Bigger returns come with more stock exposure but more swings in the market. A lower amount of stock will lower the returns but also lower the volatility. Please let me know via a call or email if you’d like a review on this topic.

 

Go Fly A Kite

Wind is one of the fastest-growing energy sources in the United States. In 2019, wind generated 7.2 percent of the nation’s electricity, powering 27.5 million homes, reported the American Wind Energy Association. Wind power has become a major provider of electricity in:

  • Iowa generating 41.9 percent of electricity
  • Kansas generating 41.4 percent of electricity
  • Oklahoma generating 34.5 percent of electricity
  • North Dakota generating 26.8 percent of electricity
  • South Dakota generating 23.9 percent of electricity
  • Maine generating 23.6 percent of electricity

I am so tempted to add Congress to this but I won’t. As with many things, wind farms have pros and cons. On the plus side, wind energy is a renewable energy source that generates income and tax revenue in rural areas. In the negative column, construction can damage drainage systems and hurt crop production. In addition, towering turbines can catch fire, throw ice, cause headaches (literally), and create other issues, reported Slate.

A new wind energy option may do away with some of those negatives in some locations. Wind kites deliver power and have a far smaller profile than many turbines. Fast Company explained:

“As the kite flies autonomously, driven by the wind, eight small onboard rotors turn and generate energy that is sent down a thin tether back to the ground…it does the same work as the tips of the blades on large wind turbines, which convert the most energy in the system because they move the greatest distance as they’re pushed by the wind. But the new technology, which came out of research at the Technical University of Munich, does that work without the same need for massive infrastructure.”

Wind kites may be well-suited to islands and other areas where importing turbines is not feasible. They may also be a sound option in hurricane-prone regions since kites can be lowered to the ground. Best of all, kites use 10 times less material, so costs are significantly reduced.

 

Focus On The Positive

Slow down

Take time to decide

Be a possibility thinker.

–Lincoln Lessons for Today

 

Best regards,

Bill Spalding