November 2024 Investylitics

Horizon Advisor Network Investment Committee November 11, 2024

The Horizon Advisor Network Investylitics Committee members met on the afternoon of Monday, November 11th, to review and discuss post-election investment and economic landscape. The unexpectedly strong and decisive election outcome has led many of the market strategists and economists we follow to update their outlooks and provide some insight as to what we can expect from a tax, regulatory, and economic policy standpoint during a second Trump administration.

It is also interesting to note that despite the bitter partisan rhetoric, concerns about higher prices, and significant debate over when the Federal Reserve Bank would cut interest rates, that the first nine months of 2024 led to the best stock market performance, as measured by the S&P 500 index, over that time frame during any presidential election year dating back to 1936.

Much of the optimism in the markets this year has been driven by GDP growth and corporate earnings. Both have consistently exceeded expectations quarter after quarter. There were significant revisions to several of the federal government’s measurements of personal income and savings, which showed that American’s were in a better place than had previously been reported. US real GDP grew 2.8% annualized in Q3, above expectations, largely fueled by healthy consumer spending, which rose at its fastest pace since Q1 2023.

The stock market moved meaningfully higher in the wake of a decisive election outcome for Donald Trump and the Republicans in Congress. While the initial response has been positive, we would like to remind you that markets are typically optimistic post-election, regardless of which side wins. There is good reason for this as markets have typically done well throughout the four-year presidential cycles during both democratic and republican administrations, as you can see in our next chart. You will note that the two presidents who experienced negative returns had significant recessions and/or geopolitical events on both the front and the back end of their terms.

GDP growth in the US has outpaced most of the rest of the developed world and is expected to continue this trajectory in 2025, as you can see in our final chart. Yes, the United States has its share of economic issues including the federal debt, growing income and wealth disparity, and an underfunded Social Security system. All these issues would need to be addressed regardless of which candidate won the election. However, for the moment, the US economy continues to be the “cleanest dirty shirt in the hamper”, especially compared to our G7 brethren.

The Federal Reserve Bank cut interest rates by an additional 25 basis points last week. The Fed seems determined to get interest rates down to a level they feel is less restrictive on economic growth going forward. A weaker than expected unemployment report, which was likely influenced by back-to-back hurricanes, gave them leeway to continue cutting rates. They will continue to be data dependent and will be watching closely as the new administration starts to implement its tax, regulatory and economic policies in the new year.

As we conclude today's report, it is important to remember that there are typically large differences between election promises, which are generally made to woo voters, and the ultimate policy that comes from legislation that must be passed by Congress. It would not surprise us to see variances between what was stated on the campaign trail versus what the final product looks like. However, it does look like the 2017 tax cuts and JOBS Act will be extended for most people given the makeup of the White House and Congress. This will likely lead most Americans to see similar tax rates for the next several years.

Despite the initial optimism the markets have shown in the wake of the election, we should still expect bouts of volatility given high prices and geopolitical uncertainty. Diversification and rebalancing your portfolio regularly have historically helped guard against these events. As always, the investment committee appreciates your trust and support. We are here for you if you have questions regarding your unique situation.

With the election in the rearview mirror, we hope you can relax and enjoy the holidays with your family and loved ones. They are far more important than what happens on Capitol Hill.

The views stated in this piece are not necessarily the opinion of Cetera Advisors LLC and should not be construed directly or indirectly as an offer to buy or sell any securities. Due to volatility within the markets, 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.

Investors cannot invest directly in indexes. The performance of any index is not indicative of the performance of any investment and does not take into account the effects of inflation and the fees and expenses associated with investing.

A diversified portfolio does not assure a profit or protect against loss in a declining market

Re-balancing may be a taxable event. Before you take any specific action be sure to consult with your tax professional.

Sincerely,

Jesse W. Hurst, CFP®, AIF®
Senior Financial Planner and CEO

*Award Recipient Jesse Hurst 

*The 2021 ranking of the Forbes’ Best–in–State Wealth Advisors¹ list was developed by SHOOK Research and is based on in–person and telephone due–diligence meetings to evaluate each advisor qualitatively and on a ranking algorithm that includes client retention, industry experience, review of compliance records, firm nominations, and quantitative criteria (including assets under management and revenue generated for their firms). Overall, approximately 32,725 advisors were considered, and 5,000 (approximately 15.3 percent of candidates) were recognized. The full methodology² that Forbes developed in partnership with SHOOK Research is available at www.forbes.com. 

¹ This recognition and the due–diligence process conducted are not indicative of the advisor's future performance. Your experience may vary. Winners are organized and ranked by state. Some states may have more advisors than others. You are encouraged to conduct your own research to determine if the advisor is right for you. 

² Portfolio performance is not a criterion due to varying client objectives and lack of audited data. SHOOK does not receive a fee in exchange for rankings.