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The Worst Sequel Ever??

The Worst Sequel Ever??

June 10, 2024

It seems originality has vanished from Hollywood. First, we are inundated with endless remakes of classic films that inevitably fail to capture the magic of the originals. Then, we're subjected to a barrage of sequels to movies that probably didn't deserve a second, let alone a third or fourth installment.

If I asked you to tell me what your least favorite movie sequel ever was, there is likely a film that would pop into your head immediately. Some typical candidates for the title of worst sequel ever would probably include such classics as Grease 2, Revenge of the Nerds II, and any Police Academy movie with a crooked number behind it. Our friend Bruce Melman, a well-known political consultant, recently gave us his own pictures for the worst sequel ever in a presentation at the Mauldin Economics Strategic Investment Conference.

Bruce indicated that many people in America feel like the worst sequel of all time is coming this November in the presidential campaign of President Biden versus former President Trump. As most of you know, Rachel and I were in Europe recently for a wedding anniversary trip. A common question we got from fellow tourists from multiple countries is, “How in a country of 340 million people could these be the two best candidates… again?”

In an update to a slide that I shared with you a couple of years ago, Bruce Mehlman proposes that dissatisfaction with the status quo drives disruption and change in modern politics. You will note in the chart below that during the 1960s and 1970s, change of control in either the House, Senate, or White House only occurred three times in 10 election cycles. It happened four times in the 1980s and 1990s. However, since the turn of the century, it has occurred in 10 of the last 12 elections.

People tend to vote based on their own personal beliefs and financial situation. It seems that a lot of voters have been stressed out, angry, or afraid for most of the last 25 years. That makes the results of the 2022 midterm elections really interesting. Despite widespread angst in the face of the highest inflation we had seen in 40 years, the recent COVID-19 pandemic, and our governmental response to said pandemic, nearly everybody who ran for reelection won. This includes 100% of Senators, 96% of Governors, and 97 1/2% of those in the House of Representatives. It seems that everybody is upset at the government…except their own elected officials.

I know that we have been getting more and more questions from clients about whether they should be concerned about the upcoming campaign and its effect on their financial resources and investment portfolios. The historical record points to much better and more consistent outcomes than most would expect, especially given the partisan bickering and rhetoric in today’s campaigns.

As you can see in our last chart below, the stock market, as measured by the S&P 500, has risen at a relatively steady and consistent trajectory, regardless of which party has held the presidency. This is because stock market returns are largely driven by technological advancements, new product innovation, and corporate leadership, which drives profits and, ultimately, stock prices, far more than whoever occupies the White House. It appears the President takes far too much credit and shoulders too much of the blame for the returns in the financial markets.

Our advice would be to continue with your properly designed, age and risk profile-appropriate asset allocation portfolio to help you reach your financial goals and not worry so much about the news and noise around the election. I know this is easier said than done, which is why I will come back to this message multiple times this year. We want to remind you of what really matters to your family’s financial health as we continue “Moving Life Forward.”

© 2024 Jesse Hurst

The views stated are not necessarily the opinion of Cetera and should not be construed directly or indirectly as an offer to buy or sell any securities mentioned herein. Due to volatility within the markets mentioned, opinions are subject to change without notice. Information is based on sources believed to be reliable; however, their accuracy or completeness cannot be guaranteed. Past performance does not guarantee future results.

Neither Cetera Advisors LLC nor any of its representatives may give legal or tax advice. This information is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation.

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