Post-election investment outlook
By Jim Ewing on November 16, 2024
As our world tries to digest the results of the recent national election and evaluate their impact, our country begins the process of preparing to transition to a new administration as well as new congressional leadership in Washington. We understand that investors may be feeling a range of emotions and understandably may have some questions about what, if anything, they should be doing to adjust their investment strategy in the weeks and months ahead.
Our political system was built to have checks and balances, which help to mitigate risk. Even though one party will now control all three branches of our government, they did not win a large enough majority to implement their agenda without challenges and compromise. While much of the news seems to be unprecedented, know that markets have a long history of performing during changes in political party leadership and the implementation of differing social and economic agendas.
We entered election day with an economy that was growing, had fairly low unemployment, ample liquidity, rapidly cooling inflation and declining interest rates. With equity markets near all-time highs, we have enjoyed strong performance for the past two years. While the platform and agenda of the incoming administration differs dramatically from its predecessor, we begin this transition at a very healthy starting point with positive momentum fueled by hopes that lower taxes and decreased regulation will increase the pace of economic growth.
While we are hopeful that the investment climate remains supportive and constructive, we are mindful of the fact that there are elements of the President-elect’s agenda that – if fully implemented — could decrease economic growth and lead to renewed inflation as well as higher budget deficits. While market volatility is a normal and healthy part of the investment process, we expect that it may increase in 2025, perhaps meaningfully. As a result, we are updating investment strategies to ensure that our client portfolios remain risk-appropriate as we monitor ongoing developments. There are wide range of potential outcomes we may see. Thus, it is too early to know with any certainty how to position. We would suggest that investors follow time-tested rules:
- Make sure your portfolio is risk-appropriate for the goal of each specific account.
- Maintain a long-term perspective and don’t overreact to short term volatility
- As your cash flow allows, continue to systematically add to your long-term accounts to potentially take advantage of market declines when they occur
- While being mindful of the impact of taxation, rebalance your portfolio on a periodic basis to ensure that portfolios remain in proper balance
Don’t hesitate to reach out with any specific questions or concerns you may have. We’ll be happy to meet and see how we may be able to help. Wishing you all an enjoyable and restful Thanksgiving!