Your Investments are Relying on a Second Stimulus

 
 
 
 

October 12th, 2020

 
 
 

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Remember in June, when the majority of Americans received a stimulus check, and it looked like the economy was building itself back. It’s easy to forget, but the pandemic has put many people out of work, leaving them struggling to pay certain bills. As a result, a second stimulus package has become a huge interest in the country.

Now in October, the news regarding a second stimulus package has been quite a roller coaster. Talks of a second stimulus began in the late summer, when people have pointed out that the country is still facing record unemployment. Deals have been introduced, deals have been rejected. Fast forward to this week, the President announced on Tuesday that Stimulus talks would come to a halt. This caused the Dow to shoot down about 600 points.

A second stimulus check would benefit all of us. We would have extra spending money to buy something that we’ve been putting off. We could save that money for a rainy day. But for investors, a second stimulus package would mean a rise in the markets.

The economics at play are simple. If people were given money for necessities they couldn’t afford before, then they will go purchase those necessities now, while they have that extra money. This results in businesses having an increase of profits. This can up the value of a stock.

A couple of days after the President’s announcement, it was announced that stimulus talks have resumed and that the government should have a deal really soon. This is good news for everybody, but this is even better news for you because since then, the stock market has bounced back due to renewed hopes of a stimulus package.

It’s not known when, or if, a second stimulus package will come our way. But if it does, we’ll let you know what we think that means for your investments.

 
 
 
 
 

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