We Are Talking Money Live dives into Washing Wine Industry along with market panic and politics.
The “father” of Washington’s wine industry. Dr. Walter Clore. In the past decade, the number of wineries has increased by 400%. It’s on the same latitude as French wine regions of Bordeaux and Burgandy. A common misconception is that Washington is all rainclouds. Columbia Valley receives 300 days of sunshine per year.
And even more shocking is that Columbia Valley averages only 6-8 inches of rainfall annually. They do have the Columbia River and plenty of snowmelt from the Cascade Mountains so supply water for agriculture. This means that in contrast to most wine regions, the vineyards are fed via irrigation.
Another climate feature of this region is going to be the extreme winds. The plant vines so that the wine can pass through and it actually reduces the presence of pests and fungus.
The largest amount of acres planted are filled with Cab and Merlot for reds and Riesling and Chardonnay for white. The soil is composed of silt/sandy so you’ll get a fruit-forward wine. For whites, you’ll have…. Lemon-lime APPLES – Washington is known for its apples so it’s no surprise on that tasting note.
Columbia Valley – this AVA was established in 1984 it’s found in eastern Washington State and some of Oregon. This represents 99% of Washington wine country.
Panic & Politics
How much is driven by media? Let’s review the history of the market in and out of election years.
1. Stocks have continued higher despite which presidential party is voted into office. If you invested $1,000 in the S&P 500, it would’ve grown to $8.96 mill. That’s through World War 2- Cold War – Vietnam – Civil Rights Protests of the 60’s – Assassinations of MLK and JFK
a. Non-election years post the highest average of gains, however, election years still show an above-average return
b. Incumbent reelection usually posts better years than a new president. A 50-year-old has lived through 3 changeovers of parties – Carter, Clinton, and Obama – in both Clinton and Obama term the Dow rose.
c. Market Seasonality “mommies to mummies” vs “turkey to tax” usually flip flop in election years
2. Investors build cash in election years- Investors have raised high levels of cash or moved cash into money market funds/savings accounts during this and all election years. The combination of the coronavirus have driven those cash reserves even higher than previous years
3. COVID rebound – S&P closed at a record high of 3,386 in February of this year… but within 3 weeks was down 26%. Yesterday is logged its first record close in 6 months and the fastest recovery from a bear market in history.
a. What’s driving this lack of panic?
b. The majority of S&P 500 companies posted better than expected earnings
c. Jobless claims came in under $1mill for the week (for the first time in 21 weeks) – 963,000
d. Retail sales jumped 1.2% in July and labor productivity up 7.3% for the month
4. All in all the main issues with this election year is the uncertainty. The market hates when predictability leaves the building.
a. In the Gore Bush race back in 2000, it took until mid-December for the decision to be made, and between November 7th of that year and December 15th, the S&P fell 8.4% with 5% of that drop coming in the two weeks following the election. Research shows that the first 4 days after that unclear Election Day carries the greatest market upset.
5. One of the best things investors can do during recoveries and pullbacks is making sure they adhere to their disciplined investment plan, which is derived from their personal financial plan, which is built by their financial advisor.