September 2020 in Review
Daniel Zeigler, CFP, CMFC, Portfolio Manager
Hi, this is Dan Zeigler, Portfolio Manager at Midland Wealth Management. I just wanted to give a quick update on September performance. After the best August for the S&P 500 in 34 years, momentum certainly reversed for the month of September, which has historically been the worst performing month, and unfortunately it didn’t disappoint. The S&P was down about 4%. This did mark the first monthly loss since March and it’s actually the worst September since 2011.
The decline was mainly led by mega-cap growth stocks, which have really done great and have led the rally for the most part. Several of these mega-cap growth stocks seemed priced for perfection as we ended August, as their valuations appeared stretched. The price to earnings ratio was around 47x earnings at the end of August, compared to the overall market of around 21x next year’s earnings.
In September, we did see a quick selloff in these big technology names of about 10 to 15% (think Facebook, Apple, Amazon, Microsoft and Google). The Technology sector did have a nice recovery after their mid-month correction, but still ended down and was only down about 4% for the month.
Despite the bumpy September, we did see momentum pick up over the last week, as investors remain optimistic on another stimulus package. In fact, the S&P 500 returned close to 10% for the 3rd quarter and is only 6% from all-time highs.
We will be paying close attention to the upcoming earnings announcements, which will provide a good gauge on how companies have performed over the last three months.
As we move into the last quarter of the year, we continue to expect volatility to be high as investors await the upcoming election and COVID-19 news, however we do continue to encourage long-term investors to stay resilient and invested as the economy continues to show signs of recovery.
If you haven’t had a chance, our latest newsletter was just released and has some good commentary on the potential outcomes of the upcoming election and ramifications on the economy and stock market. Thank you.
Midland Wealth Management is a trade name used by Midland States Bank, its subsidiary Midland Trust Company and its affiliate Midland Financial Advisors, an SEC registered investment advisory firm. Investments are not insured by the FDIC or any other government agency, are not deposits or obligations of the bank, are not guaranteed by the bank or any federal government agency, and are subject to risks, including the possible loss of principal.