October 2024 Investylitics

Horizon Advisor Network Investment Committee October 7, 2024

The Horizon Advisor Network Investylitics Committee members met on the afternoon of Monday, October 7th, to review and discuss the most recent investment and economic commentary from the market strategists we follow. With election season entering its last few weeks and geopolitical uncertainty in multiple locations around the globe, recent economic data has been unexpectedly strong and helped move US stock markets toward all-time highs.

If you turn on the television, you can't help but be deluged by ongoing campaign commercials. This political season has been harsh on rhetoric and charges from candidates on both sides of the aisle. Our committee has tried to remind our clients that, by and large, outcomes of Presidential and Congressional elections do not often move the needle significantly for the markets. To help cement that thought process, we would like to share the following chart showing the annualized total returns of the markets during our last eight Presidents.

We want to thank our friends at Richard Bernstein Advisors (RBA) for the above chart. You will likely note that the stock market had double-digit returns for all the presidents in the chart except for George W Bush, who got to endure both the dot.com/9/11 downturn and the subprime mortgage crisis. Even Jimmy Carter, who recently celebrated his 100th birthday and is generally much maligned for his economic performance, saw the stock market return 12% a year during his administration.

RBA also astutely pointed out that gold was the best-performing asset class under Carter (Democrat) and Bush 43 (Republican). Commodities were the best performer under Biden (Democrat) but the worst under Obama (Democrat) and Trump (Republican), and stocks were the best performer under Reagan (Republican), Clinton (Democrat), Obama (Democrat), and Trump (Republican). Stocks were either the best or second-best performing asset class during six of the past eight Presidents’ time in office.

Many investors would be surprised to learn that despite the bitter and partisan rhetoric we hear about how the election will impact the economy, the stock market has experienced its best nine months of a presidential election year in nearly 90 years, as you can see in our second chart below.

Economic reports over the last month have supported the Federal Reserve Bank's narrative that inflation is continuing to moderate without causing significant damage to the economy or employment. Both the CPI and PCE measures of inflation continue to moderate under 3%, giving the Fed more confidence to begin cutting interest rates. They started this interest rate decrease campaign with a 1/2% rate cut in September. This was their first interest rate cut since March 2020, during the early days of the COVID-19 pandemic.

After a disappointing unemployment report in early August caused many to fear that the Fed had waited too long to begin cutting interest rates, job growth picked up, and the unemployment rate unexpectedly fell with September and October reports. The most recent report, released on October 4th, showed that the economy created 254,000 jobs. There were also upward revisions to the previous two months' reports and an upward revision to GDP growth, which seemed to show the economy on firmer footing than previously believed.

As the committee met on October 7th, the one-year anniversary of Hamas’ brutal invasion of Israel, we would be remiss not to acknowledge that there is significant geopolitical uncertainty and hot spots across the globe. As we learned on 9/11, these incidents can lead to short-term market volatility. However, when these unfortunate events occur, they often kick economic activity and the military-industrial complex into high gear, historically supporting economic growth.

With markets near all-time highs, we continue to recommend raising cash for any short-term liquidity needs and rebalancing your portfolio regularly to help keep your portfolio allocation in line with your risk profile and investment objectives. These two activities will help you manage risk and maintain a proper perspective during the inevitable ups and downs of the markets.

As always, if you have any questions about your unique situation, please feel free to contact your advisor. We are here for you as we are all anxious to put political and campaign ads in the rearview mirror.

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

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.