“Invest for the long-haul.” and “Buy assets that will increase in value.”
- Warren Buffett, from his 2020 Annual Meeting

Happy Wednesday!

Overall, the Dow, S&P 500, and Nasdaq all declined in September. After locking in their best August in more than 30 years the Dow slipped 2.28%, the S&P lost 3.92% and the Nasdaq declined 5.16%. This is certainly evidence of the expected “pause” that we mentioned in our last market update and is a much more measured response to the overly optimistic response thus far to the Covid-19 pandemic.

The upcoming Presidential election season is in full swing and as predicted the two camps are in the middle of a bruising campaign. It certainly looks like Biden is carrying not only the popular vote but also many of the key battleground states. As I mentioned last month, reasonable men and women seem to agree that Biden is a man of decent character and exemplary leadership, which can’t be said about Trump.

The Dow slipped 2.28% in September, as the markets focused more on value investments, especially industrial and consumer staples.
The S&P lost 3.92% in September, as the markets focused more on value investments and the fading hope of additional fiscal stimulus.
The Nasdaq declined 5.16% in September, as Tech stocks were under considerable pressure all month. After massive run-ups in the past few months, it was time for value stocks to move back into the limelight.

In September, the growing number of coronavirus cases in the world, and specifically in the US, along with the associated constraint on full-scale business re-opening in the US continues to stress investors’ minds. In addition, the Presidential election is a major concern. If that were not enough, the escalating nature of the US-China trade war also continues to weigh on investor’s minds.

Countering this negative news, M&A transaction volume has increased and the Fed continues its unprecedented support of the economy. In addition, progress on the Covid-19 vaccine has been very positive and the Housing sector has been a bright spot with strong consumer demand thanks to low interest rates.

In October we believe the public markets will continue drifting sideways and higher. We believe that out-of-favor lower-PE Dow companies represent a continued buying opportunity during Q3 ‘20. I especially like the Industrial sector where PE ratios are very reasonable, and growth in this sector should increase as the country opens back up for business. Verizon also continues to be a top selection as we view it as a stronger and more nimble competitor compared to AT&T.

In our public portfolio in October, we plan to continue migrating our large cash and bond position (now standing at 50%) into defensive quality investments at superior values. Take a look at our latest TOP 10 investments list for what we consider to be the best, quality investments.

Thanks again for your consideration & for sharing your thoughts and ideas with us. Have a wonderful October and 2020 ahead!

Best regards,
Vinnie

Vincent M. Oddo
Managing Partner
PointFour Capital, LLC
vincent.oddo@pointfourcapital.com