"History doesn't repeat itself, but sometimes it rhymes."
Lately, I've received many calls from clients concerned about the flood of information surrounding the 2024 presidential election. The sheer volume can be overwhelming and, at times, worrisome. I felt it was time to share some thoughts with you directly.
Part of my role as an advisor is to provide perspective. It’s easy to get caught up in recency bias, where it feels like "everything bad is worse than it’s ever been." While predictions of downturns or catastrophes are sometimes accurate, more often than not, they are overstated.
There are always reasons to hesitate or withdraw from investing, but doing so can mean missing out on opportunities. For instance, had we moved to cash 10 years ago out of fear of an economic crash, we would have missed the broad-based market returns of 10-12% per year, effectively doubling our investments.
Here’s what I do know:
- Markets crave certainty and prefer to move past any presidential election.
- No matter the outcome, 40-50% of voters will be unhappy, leaving 50-60% content. It’s a balance, and markets primarily seek to remove the uncertainty of the election itself.
- Right now, we’re seeing the positive economic data we’d hope to see.
- In the past 100 years, no economy or market has been derailed solely because of a presidential election. Since 1928, in the 1-month, 3-month, and 6-month periods following elections, markets have shown conservative gains of 5% or more.
- Major downturns, like the 2000 tech bubble and the 2008 financial crisis, were caused by deeper economic issues, not elections.
- Over the past century, we’ve endured continuous wars, 24 elections, 15 different presidents, 1950s tax brackets of 90%, and inflation rates over 13% in the early 1980s. Yet, through it all, our economy has continued to grow.
- The US economy remains the “cleanest dirty shirt.” Inflation is a global issue, and while all major economies face challenges, the US economy is still the envy of much of the world.
As for your investments, we remain diversified. I closely monitor market developments daily, sometimes minute by minute. As an investor myself, this matters to me both personally and professionally.
While I always take your direction, my perspective is that we’ve been through similar periods before, and I remain cautiously optimistic.
On a personal and professional note, I’ve recently published a book that explores many of the topics I’ve discussed here: "Riding the Waves: A Century of the US Stock Markets' Generational Cycles." I’ll be happy to share a copy with you soon.
Please feel free to reach out with any thoughts or questions.
All my best,
Brian
Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
Past performance is no guarantee of future results.