As we turn the corner from the election season that dominated the 2024 news cycle, we have results and perspective for what’s next when it comes to investments and the economy.
Former President Donald Trump won the electoral college decisively solidifying a GOP victory in tandem with congressional Republicans with a defeat of Vice President Kamala Harris and loss of seats for Congressional Democrats. Our country is sharply divided, but also that the electorate pushed back against the status quo embracing change similar to 2020, but this time in the reverse direction.
Keep Perspective
Politics are personal and we know that we all view the economy and markets through a lens of our partisan preferences. If you are a democrat and thought things were going well with the economy, you’re likely to feel more pessimistic today. If you are a republican and felt that we were moving in the wrong direction, you’re likely to feel more optimistic now. Don’t let the lure of identity perspectives obscure your point of view on the economy and investments.
We continue to see data indicating we have a growing economy with low unemployment and declining inflationary trends. I often say that the economy and markets don’t care who is president, and your investing time horizon is much longer than the US two and four-year election cycle. Don’t be swayed by fear or greed based on DC politics.
Rely on Process
For clients of Pearl Planning, investment process trumps investor sentiment or vibes. Maintaining processes, especially in times of transition, is the hallmark of a sound and enduring investment strategy. For now, focusing on rebalancing investment portfolios to fit with your target investment allocation, monitoring your savings targets and cash needs, and keeping portfolio costs in check are great process examples where you can “focus on what you can control.”
On the Horizon
It can seem easy to predict what to expect for a new governmental regime. When that mixes with investing, predictability often goes out the window. While alternative energy had stunning returns during the first Trump term, energy has done exceedingly well during the Biden presidency. Conventional wisdom’s predictions would have reversed these outcomes. Here are some things we will be focusing on in the coming months:
Tax Agenda: The Tax Cuts and Jobs Act, enacted during President Trump’s first term, is set to expire at the end of 2025. A likely extension or new tax legislation is likely to be on the agenda early in the next term. As financial planners, we approach tax-related changes individually, taking each client’s unique circumstances into account. Tax-savvy guidance is essential to our work together, and we prioritize understanding tax implications as part of comprehensive financial planning. However, please note that our advice does not replace accounting expertise, and we encourage working alongside tax professionals.
Economic Policy: A lot of promises were bantered about by both candidates in 2024, but a specific economic policy remains more conjecture than black and white. Time will tell what will be changing and how it will impact families. A resilient investment strategy coupled with the hallmarks of a financial plan – built for a variety of environments – may be an antidote for uncertainty.
Regulation: For the investment profession, specifically, we’ve been subject to a variety of changes regarding SEC regulation for the past 16 years. More change and uncertainty are likely to come. During the first Trump term, environmental, social, and governance investing (ESG) was a particular focus of regulatory scrutiny. This will likely reemerge as a regulatory focus while other impending rules might be set aside.
Maintain Optimism: Fear sells, but we believe in a process grounded in risk-aware optimism to help clients pursue long-term investment goals. By balancing risk and potential reward, we aim to navigate market changes thoughtfully and with a focus on each client’s unique path forward. History’s track record shows that it’s better to favor investing across presidential terms rather than cherry-picking your favored candidates.
Later this month, we’ll be publishing our year-end tax and financial planning video. As always, our focus will remain on resilient financial plans built to manage your money as a critical enduring resource for you and your family.
If you have questions, please don’t hesitate to contact our office at 734.274.6744.
Important Disclosure: Please remember that past performance is no guarantee of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Pearl Planning, or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from PEARL PLANNING. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to their individual situation, you are encouraged to consult with the professional advisor of your choosing. Neither PEARL PLANNING’s investment adviser registration status, nor any amount of prior experience or success, should be construed that a certain level of results or satisfaction will be achieved if PEARL PLANNING is engaged, or continues to be engaged, to provide investment advisory services. PEARL PLANNING is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the PEARL PLANNING’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request or at https://pearlplanning.com/. Please Note: Pearly Planning does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Pearl’s web site or blog or incorporated herein and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please Remember: If you are a PEARL PLANNING client, please contact PEARL PLANNING, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. Unless, and until, you notify us, in writing, to the contrary, we shall continue to provide services as we do currently. Please Also Remember to advise us if you have not been receiving account statements (at least quarterly) from the account custodian.