So far, it’s been a relatively good year for investors. Despite a brief correction in late July and early August, many sectors have performed well, with the tech industry continuing to lead the way. Now, with the Federal Reserve poised to lower interest rates, the outlook for bonds and bond funds over the next 12 months appears bullish and optimistic. How will the 2024 election shape the future of our investments?

Will the 2024 Election Impact the Stock Market?

As we look toward the upcoming November elections, one pressing question arises: Who will win, Trump or Harris? And, more importantly, will the election outcome impact the equity markets?

The truth is, it may not matter much to the equity markets, provided we continue to have a divided government. Historically, markets tend to perform best when no single party dominates, and this is a likely outcome in the upcoming election.

What Does a Divided Government Means for Investors?

Trump aims to lower taxes and extend the “Trump Tax Cuts,” while Harris has expressed intentions to raise the corporate tax rate and the capital gains tax rate. However, without the support of Congress, neither can fully implement these plans. In a divided government, compromise becomes the order of the day, which often benefits American investors. On the other hand, when either the Republicans or Democrats control both the White House and Congress, it’s the American investor who typically loses out.

Political Gridlock Can Be Good for Your Portfolio

In today’s polarized political climate, it’s almost unthinkable for voters to wish for a victory by the opposing party. This division can be frustrating, but paradoxically, it can also be beneficial for investors. Of course, this doesn’t take into account the hundreds of executive orders that a new President may sign into temporary law, which do have significant implications. Here, however, we are focusing on the broader financial and fiscal outcomes for investors.

Inflation and Economic Challenges for the Next President

There’s no doubt that we have experienced some of the worst inflation in recent years since the 1970s. Just look at the prices of everyday commodities, and you’ll see what I mean. If you think the world is becoming safer, consider the ongoing tensions with China and the Middle East. If you believe we have control over the burgeoning federal deficit, think again—it has now surpassed $35 trillion. And if you think the Economy is on a strong upward trajectory, just review the jobs reports and consider why the Federal Reserve is preparing to lower interest rates.

Key Issues Facing the Next Administration

The next President will face these challenges head-on and will need to act quickly. Addressing the defense budget will be crucial, especially considering the potential for multi-front conflicts across several continents. Tackling the federal deficit is equally critical to avoid burdening future generations with a weak dollar and insurmountable debt. Achieving energy independence must be a priority. As reliance on foreign energy sources continues, it empowers adversaries like China, Russia, and global terrorism. Achieving energy independence is crucial for national security and economic stability.

Moreover, the growing Crypto market demands attention, raising questions about why we don’t yet have a U.S. crypto dollar. The future of the internal combustion engine also hangs in the balance, with the American consumer showing lukewarm interest in electric vehicles.

The Reality of Energy Consumption

The next President must be honest with the American public about energy consumption. Regardless of how much solar and wind energy we produce, the reality is that the U.S. will continue to consume up to 20 million barrels of oil and 33.5 trillion cubic feet of natural gas daily. This is a fact that cannot be overlooked or sugar-coated.

Preparing for Economic Challenges

The next President may also have to explain why their election could lead to a short-term recession and economic hardship. This scenario seems increasingly likely. Balancing economic growth with fiscal responsibility will be a critical challenge, one that requires strategic planning and difficult choices.

The 2024 Election is More Than Social Issues

Is your head spinning yet? It’s easy to assume that elections are solely about social issues that resonate with many Americans. However, the economic and financial decisions that follow an election can have far-reaching implications. Social Security and Medicare, often considered untouchable, may need to be reformed to ensure the long-term fiscal health of the United States.

Conclusion: Stay Informed and Prepared

As an investor, stay informed. Understanding the potential impacts of political changes on the market is crucial. While it may be impossible to predict every outcome, being aware of the issues at stake can help you make better-informed decisions.

For more information, feel free to call me anytime at 925-314-8503 or email elliot@prosperityfinancialgroup.com.

All my best,
Elliot

The post Election 2024: What It Means for Your Investments appeared first on Prosperity Financial Group | San Ramon, CA.

Elliot Kallen Wealth Manager | Registered Principal

For more than three decades, Elliot has provided customized wealth management solutions for entrepreneurs, business owners, retirees, and millennials.

Elliot and his wife, Tammy, are passionate about giving back to the community through their 501(c)(3) foundation, A Brighter Day. Through his partnership with A Brighter Day Charity, the Kallen family has helped local teens and young adults recognize and access resources to cope with the risks of stress and depression.

He enjoys spending his free time with his family. Some of his hobbies include cooking, wine, golf, travel, and studying history.

He lives in Lafayette, California with his wife, step-daughter, and grandson.