How to navigate various Trump-Biden scenarios, plus an interview with investing legend Rob Arnott
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Joe Ciolli
Oct 6, 2020, 23:56 IST
Bloomberg TV
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Dear Readers,
What's already been a wild year for markets got even more turbulent late last week when President Donald Trump tested positive for COVID-19. Stocks immediately took a dive upon digesting the news — and their subsequent recovery was just as sharp amid encouraging reports around Trump's status and subsequent hospital discharge.
The whole ordeal added even more uncertainty to a market already grappling with its fair share of question marks. Some experts viewed Trump's diagnosis as a positive for stocks, arguing that it will inspire people to take more precautions. Another school of thought suggested that any minimization of the virus' effect by Trump behalf might worsen the situation.
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So which one is it? And will the election — coming our way in just four weeks — overrule whichever it is in short order?
On the election front, even though Trump has long claimed a Democratic win would tank markets, Wall Street has been increasingly arguing the opposite as Joe Biden distances himself in the polls. Just yesterday, the chief economist at Goldman Sachs said that a Biden-led blue wave would lead the firm to boost its economic growth forecasts.
This renewed market volatility and the resulting range of forecasts has informed Business Insider's work in recent weeks. See below Business Insider's best Investing stories of the week, which include a wide array of additional recommendations, strategies, and tips for navigating uncertainty.
The world's biggest and best investment firms pay Rob Arnott for advice. For years, Arnott has spread the gospel of an investment strategy known as "smart beta," which has evolved into one of the world's hottest investment strategies and grown into a roughly $1 trillion industry.
In an exclusive interview, Arnott shared with Business Insider he's seeing opportunities and finding value now. While he sees some big bubbles forming, he also identifies sectors where he see "extraordinary bargains."
The Alger Small-Cap Focus Fund and Mid-Cap Focus Fund, managed by Amy Zhang, have returned 27.39% and 46.08% this year, respectively. Both have outperformed their benchmarks and nearly all of their category peers.
"A typical basket of defensives is functioning about as well as fire insurance that covers just one bedroom in the house."
— John Normand, JPMorgan's head of cross asset fundamental strategy, discussing just how poorly traditional stock-market hedges have been working recently
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