The Week on Wall Street
Despite news of another COVID-19 vaccine candidate, stocks were mixed amid investor anxiety over increased new infections and economic lockdowns.
FACT OF THE WEEK
In 1953, someone at Swanson colossally miscalculated the American appetite level for Thanksgiving turkey, which left the company with some 260 tons of frozen birds sitting in ten refrigerated railroad cars. Enter the father of invention, Swanson salesman Gerry Thomas, a visionary inspired by the trays of pre-prepared food served on airlines, who ordered 5,000 aluminum trays and recruited an assembly line of women — creating the first-ever TV dinner.
The Dow Jones Industrial Average fell 0.73%, while the S&P 500 declined 0.77%. The Nasdaq Composite Index rose 0.22% for the week. The MSCI EAFE Index, which tracks developed overseas stock markets, gained 1.42%.
The announcement of another potential COVID-19 vaccine ignited substantial gains to begin the week. But, like the week that preceded it, the gains ignited by the vaccine news were stifled in the following days as worries over the economic impact of new infections moved to the fore.
The market has been grappling with conflicting narratives. One is the optimistic view that, with COVID-19 vaccines near-at-hand, the return to economic normalcy grows ever closer.
Hopeful outlooks have been offset by anxiety over new infections, rising hospitalizations, and some local and state lockdowns. These crosscurrents kept stocks range-bound for the week, with the technology sector and small and mid-size stocks lending support to the overall market.
Powell Sounds a Warning
In a speech last week, Federal Reserve Chairman Jerome Powell warned that the nationwide increase in COVID-19 cases could hamper economic activity in the upcoming months. He expressed concern that consumer spending may trend lower despite efforts to control the spread of infections.
Powell once again voiced his support for additional fiscal stimulus to assist small businesses, state and local governments, and the unemployed. He also said that some companies and workers might wrestle with an economic landscape altered by the coronavirus even after full economic recovery.
FINANCIAL STRATEGY OF THE WEEK
The Coronavirus Is Novel, but Crisis-related Scams Are Nothing New
Coronavirus Scam Alert
With the world focused on the COVID-19 pandemic, fraudsters who continue to peddle supposed miracle cures or purportedly innovative technologies are preying upon unsuspecting investors.
While some of these claims could be legitimate, many will leave investors less than they initially had to start. State and provincial securities regulators recently launched an enforcement initiative to disrupt investment schemes related to the pandemic, many sharing common characteristics.
• The focus steers toward fear and anxiety by promoting safe returns independent of the stock market and the economy.
• There is an exploitation of trendy assets such as cryptocurrencies or complex investment programs involving foreign currencies. While some may sound new or exciting, these products are unfamiliar to most inexperienced retail investors.
• Returns are referred to as "passive income" or "cash flow" and promise monthly payouts, which may appeal to unemployed retail investors or others negatively impacted by changes in the economy.
• Often a misrepresentation of associated risks with the investments or the use of professional-looking webpages adds legitimacy to the fraudulent offerings.
How to Protect Yourself from COVID-19 Scams
Do not invest what you cannot afford to lose. Always ask questions about the risks and fees involved. Conduct your independent research. Searching the web can reveal civil or regulatory actions taken against companies or individuals.
Read the fine print. Every investment is unique. Offerings will not be the same nor have similar terms as other offerings you may have seen. Check the SEC's website to determine whether the company files any disclosures and verify any information about the company.
Before deciding to invest. Ensure that you understand the investment before making a decision, even if the investment opportunity appears to be legal. Try to ask relevant questions about the business and its promoters before you hand over any money in a private placement offering.
Always proceed with caution if asked to participate in any partnership or joint venture if you have no specific experience, knowledge, or education in the industry sector — which is often the healthcare industry for coronavirus-related frauds — and would have to rely on others' expertise.
As always, please contact my office with any questions or financial concerns you may have.