SO, YOU THINK THE PAST YEAR WAS BAD? "ADV"

January 14th, 2021

SO, YOU THINK THE PAST YEAR WAS BAD?

The unsettling political developments of the past week have capped a year of volatility and uncertainty like we haven’t seen in many years. I’ve had many clients concerned about the civil unrest and the impact it might have on the stock market. Like any good market advisor, I decided to look for a comparable period in history that might shed light on what we might expect.

DOES ANYONE REMEMBER 1968?

In 1968, I was a student at Oak Ridge High School, and I’ll never forget several of the events of that year, maybe the most troubling year of my lifetime. I know many of you weren’t even around yet, but I suspect you will have heard about several of the historic occurrences that shook our nation that year. Let’s take a walk through the history of 1968 according to Wikipedia:

• · January 23 – North Korea seized the USS Pueblo, claiming the ship violated its territorial waters.

• · January 30 – Vietnam War: The Tet Offensive begins; Viet Cong forces launch a series of surprise attacks across South Vietnam

• · February 8 – American Civil Right Movement. A protest staged at a white-only bowling alley in Orangeburg, South Carolina is broken up by highway patrolmen; 3 college students are killed.

• · February 19 - The Florida Education Association (FEA) initiates a mass resignation of teachers to protest state funding of education. This is, in effect, the first statewide teachers' strike in the United States.

• March 10–11 – Vietnam War: Battle of Lima Site 85, the largest single ground combat loss of United States Air Force members (12) during the (at this time) secret war later known as the Laotian Civil War.

• · March 11 – U.S. President Lyndon B. Johnson mandates that all computers purchased by the federal government support the ASCII character encoding

• · March 18 – Gold standard: The United States Congress repeals the requirement for a gold reserve to back U.S. currency

• · March 31 – U.S. President Lyndon B. Johnson announces he will not seek re-election

• · April 3 - Martin Luther King Jr. delivers his "I've Been to the Mountaintop" speech in Memphis, Tennessee

• · April 4 - Martin Luther King Jr. is shot dead at the Lorraine Motel in Memphis, Tennessee. King-assassination riots erupt in major American cities, lasting for several days afterwards.

• · April 6 A shootout between Black Panthers and police in Oakland, California, results in several arrests and deaths, including 17-year-old Panther Bobby Hutton.

• · April 6 - Richmond, Indiana explosion: A double explosion in downtown Richmond kills 41 and injures 150.

• · April 23-30 – Student protesters at Columbia University in New York City take over administration buildings and shut down the university.

• · May 13 – Paris student riots. One million march through the streets of Paris.

• · May 17 – The Catonsville Nine enter the Selective Service offices in Catonsville, Maryland, take dozens of selective service draft records, and burn them with napalm as a protest against the Vietnam War.

• · May 22 – The U.S. nuclear-powered submarine Scorpion sinks with 99 men aboard, 400 miles southwest of the Azores

• · June 5 – U.S. presidential candidate Robert F. Kennedy is shot and killed at the Ambassador Hotel in Los Angeles

• · July 23–28 – Black militants led by Fred (Ahmed) Evans engage in a fierce gunfight with police in the Glenville Shootout of Cleveland, Ohio,

• · August 22–30 – Police clash with anti-war protesters in Chicago outside the 1968 Democratic National Convention. The riots and subsequent trials are an essential part of the activism of the Youth International Party

• · August 28 – John Gordon Mein, U.S. Ambassador to Guatemala, is assassinated on the streets of Guatemala City, the first U.S. Ambassador assassinated in the line of duty.

• · October 11 - In Panama, a military coup d'état, led by Col. Boris Martinez and Col. Omar Torrijos, overthrows the democratically elected (but highly controversial) government of President Arnulfo Arias. Within a year, Torrijos ousts Martinez and takes charge as de facto Head of Government in Panama.

• · October 14 – Vietnam War: The United States Department of Defense announces that the United States Army and United States Marines will send about 24,000 troops back to Vietnam for involuntary second tour

• · October 22 – The Gun Control Act of 1968 is enacted

• · November 14 – Yale University announces it is going to admit women

• · November 20 – The Farmington Mine disaster in Farmington, West Virginia, kills seventy-eight men

• · November 24 – 4 men hijack Pan Am Flight 281 from JFK International Airport, New York to Havana, Cuba.

Pardon the lengthy list, but frankly I was amazed at all the unsettling events of the year, and 1969 started out with Vietnam War protests around the world, as well as its share of disasters. But strategists and analysts suggest markets often disconnect from horrible realities and headlines. Even in 1968, markets finished the year up over 7%.

According to Tom Lee, head of research at Fundstrat Global Advisors:

“1968 was the year that shattered America and many tumultuous events and violence took place that year. And despite that, the equity markets managed to perform solidly. 1968 is a reminder that stocks and world events are not always connected.”

Wall Street filters the news of civil and political unrest much like it deals with natural disasters…with painful short-term impact on select companies and industries but little long-term consequences. On the other hand, news about the Covid-19 pandemic, good or bad, has tended to move the market accordingly, also on a short-term time frame. Thankfully, the vaccinations currently under way are expected to soon allow us to return to our normal way of life (and spending habits).

BOTTOM LINE

Bottom line, the analysts I respect are uniformly optimistic about our economy and the financial markets for 2021. Having said all that, we confidence that your portfolios are well positioned for most any market scenario, including a repeat of 2008 should anything that severe and long-lasting were to come along.

Sincerely,

Dave Crouch

Registered Principal

Financial Advisor

Kim Blackburn

Branch Operations Manager

Kay O’Connell

Financial Advisor

Warren Buffet Quote:

"Since I know of no way to reliably predict market movements, I recommend that you purchase Berkshire shares only if you expect to hold them for at least five years. Those who seek short-term profits should look elsewhere."

Any opinions are those of the author and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Past performance does not guarantee future results. Asset allocation and diversification do not ensure a profit or protect against a loss.