Obsidian Market Update 12/5/20

We hope all of you had a wonderful and safe Thanksgiving and are settling in for a different, and still bright, holiday season. This week we have some good news about the stock market and some information about how to best use your charitable giving dollars this year.

U.S. stocks had their best November since 1988, thanks to two main factors. First, it seems likely that at least one and maybe two COVID-19 vaccines will be approved by the end of the year so that vaccinations can begin. Second, “the U.S. election delivered a winner, and central banks reiterated plans to keep monetary policy loose.”

Small-cap stocks (smaller companies that are publicly traded) had their best month ever, up 19%. These stocks are often the first to signal economic recovery.

Black Friday was also great for the economy: it was the second-largest online spending day in U.S. history, with consumers spending $9 billion in just one day and $6.3 million per minute. In-store and curbside pickup increased 52% as shoppers took advantage of deals without risking COVID exposure.

This time of year, while we’re all enjoying giving gifts, many of us also want to give to charity. Even though Giving Tuesday is over, we know many of you plan to donate money, resources, and time over the next month. It’s great for the recipients and the donors, and with thousands of causes and charities to choose from, how do you pick?

The first thing to assess is whether the charity is doing the most good with the money you give them. While you can do some of that research on your own, a rigorous, methodical charity recommender can save you a lot of legwork. GiveWell is a great tool if you want to assess whether your dollars are going to the charity or the overhead of the institution. Other charity recommenders, like GuideStar and Charity Navigator, are also useful tools. GiveWell also ranks charities based on need and how much good additional donations would do. Some can put money to immediate use while others will sit on it. Often, local charities like food pantries will have the highest proportion of money going right to the mission because they are run by volunteers with low overhead.

You may also want to pick charities that use research-based strategies based on the evaluations done by charitable organizations and research literature on the kinds of interventions the charities are doing. In most cases, for instance, hundreds of studies show that money is the best thing to give (over food, clothing, and other physical items).

Other factors to consider are whether you want to donate to a foreign or domestic charity or to a meta-charity, some of which can actually turn a dollar of donation into more than a dollar to the charities. Groups like 80,000 HoursInnovations for Poverty ActionThe Life You Can Save, and Giving What We Can are all doing this work.

If you want to know that your money is doing the most work it can for the cause you care about, avoid giving to large relief organizations. They tend to have limited transparency about where the money is going and are generally less effective than public health programs.

Past performance is no guarantee of future results.  Securities offered through Triad Advisors, member FINRA/SIPC. Advisory Services offered through Obsidian Personal Planning Solutions, LLC. Obsidian Personal Planning Solutions, LLC, and Obsidian Personal Planning Solutions, Inc, are not affiliated with Triad Advisors.