The Election; 5 Overly Simple Potential Outcomes

Voting Insights, A Coffee Invitation and a Little ETF Nerd Humor

Truth growing through adversity is how a foundation is built stronger. The relationship between financial advisors and their clients, formed through time and trust, is strengthened during periods like what this country is currently going through. So, on October 29 at 10 AM EST, the ETF Think Tank is proud to expand its discussion forum with the launch of the Think Tank Exchange; an open, interactive format for financial advisors to share insights and how they are handling the tough questions. Thank you both State Street Global Advisor’s Matthew Bartolini for sponsoring the call, and Michael Chadwick for being the first financial advisor participant. Here is the link to join.

To present a context of the conversation, we offer the following summary:

1. A Blue Sweep, with Biden and the Democrats in control, most likely leads to the largest stimulus package and currently looks like the highest probable outcome. Yes, the Biden plan calls for $2.5 trillion in tax increases, but there needs to be a strategy to pay down some of the debt. Right?
2. Biden wins, and the Republicans remain in control over the Senate. A stalemate and analysis by paralysis means less stimulus to the economy and growth in 2021 is delayed. Powell to the rescue?
3. Trump claims victory, and Republican Senate leads to more headlines about China and a stimulus package that is redesigned?
4. Trump wins, and the Democrats take the Senate, possibly leading to a quick compromise on the $2 trillion stimulus package that is currently pending? An infrastructure bill would likely be something that everyone could agree on at the start.
5. 1. Columbia Threadneedle offered a clear diagram of an outcome that can be shared with Clients.
   2. An article by Elaine Kamarck from the Bookings Institute website provides another detailed explanation. See Link.
   3. CBS Sunday Morning Video shares a historic perspective: “Voter fraud, suppression and partisanship: A look at the 1876 Presidential election” (Republican Rutherford B. Hayes vs. Democratic Samuel Tilden). The only good news in this paralleling historical example is that the country overcame the challenge.

We know your time is precious and we plan to make the Think Tank Exchange constructive and engaging, providing content for dealing with the tough client discussions. Noteworthy is the fact that, as of October 24 at 1pm, 59 million Americans have already voted. Here is the link to get a current count. According to the U.S. election project, in an article written in the USA Today by Grace Hauck, more than 257 million Americans are 18 or older, and 240 million people are eligible to vote.[i] In 2020, expectations are that records will be broken on voter participation; 85 million people may vote before November 3, and 150 million voters is the guesstimate of the total turnout. Many people are reporting waiting 4 hours to vote and not complaining, but could voting on the blockchain – in decades to come – solve part of this problem? [ii]

An Alpha Generating Portfolio That Spells VOTE

Given the absolute seriousness and stress of this moment in history, we thought a little ETF Nerd levity would be appreciated. Of course, as ETF Nerds, we went to the KPI data for a list of ETF symbols that spell out VOTE! Yes, Vanguard ETFs dominate the letter V for symbols. In total, the letters V O T E screen down to 358 symbols, with $1.4 Trillion AUM. There is a lot of alpha to the word, so yes, we built a portfolio (see below)

Conclusion

Again, we hope you will join us this Thursday, October 29 at 10 AM EST to engage in real dialogue on how to deal with the challenges before us. We are happy to share the details of the VOTE portfolio upon request as well. Hope everyone remains safe and votes.

[i] https://www.usatoday.com/story/news/politics/elections/2020/10/22/voter-turnout-2020-ranking-us-presidential-elections/6006793002/

[ii] https://www.scientificamerican.com/article/are-blockchains-the-answer-for-secure-elections-probably-not/ and https://www.computerworld.com/article/3430697/why-blockchain-could-be-a-threat-to-democracy.html

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