The stock market continued to advance during the 3rd quarter with our stocks up over 6%. The economy is in a V shaped recovery and corporate earnings continue to rise above expectations. The underpinnings of the market improvement are clearly a function of monetary stimulus and the expectation of further fiscal stimulus after the election, if not sooner. We see signs of a broadening out of market strength to include value and small-cap stocks.
One fascinating development in this highly charged election year has to do with continued market strength in the face of extreme caution on the part of many hardcore Republicans and Democrats. The Democrats are terrified about the potential for another 4 years living with a somewhat unpredictable and erratic President Trump. Republicans are apoplectic about the possibility of a Biden victory and the influence of the far left, including Bernie Sanders and AOC. We have lived through many elections and many markets and believe that the US economic engine will continue to function well no matter what the results of the 2020 election.