Date: October 2, 2020

Trump Contracts Corona – Do Markets Care?

As everyone now knows, President & Mrs. Trump have the Coronavirus. Health scares from the West Wing have not been commonplace and markets typically do not like the uncertainty. We have had them with Bush and Reagan and Ike and more. Market reaction depends on the condition of the markets before the scare occurred.

As you know, I have been on the negative side for some and I continue that way today. I have been very firm that I am looking for one more decline to new lows in mid-October. I cannot be any more plain than that although I may be too cute for my own good. Today’s decline would have happened regardless. And if Congress reaches a new stimulus package and stocks rally, I will view that as a selling opportunity until proven otherwise.

I hope I am crystal clear. Our portfolios have been carrying an unusually high amount of cash because that’s what our models say to do. Risk has far outweighed reward. That worked out well in September, but October is a new month. I continue to believe that stocks should firm into the election. No change in tune there. I guess the only outcome I have not fully considered is one where the President’s condition worsens rapidly and the 25th Amendment is invoked, making Mike Pence the temporary President.

Regardless of whether you love or hate Donald Trump, everyone should wish him and Melania (and everyone else afflicted) a full and speedy recovery. The chatter on social media today is so sickening, despicable and disgusting. So many people are really tough behind their keyboards from their parents’ basement.


Paul Schatz, President, Heritage Capital