| You may have heard dire warnings that the stock market will crash if one presidential candidate or the other prevails on November 5. Some say former president Donald Trump will ruin the bull market if he regains the Oval Office. Others maintain that the current market rally is doomed if Vice President Harris ascends to the highest office. Don't believe any of it. Also be very skeptical of those who advise you to move your money out of stocks and into assets like cash or gold in case a particular candidate wins. Because the absolute worst thing you can do is disinvest from stocks based on who controls the presidency. Throughout history, remaining invested has been much more important to success in the market than which political party wins the election. Don't believe me? Keep reading... The Importance of Staying in the Market In the post-World War II era, beginning with Dwight Eisenhour in 1953, we've had seven Republican presidents and six Democrats. If you invested $1,000 in 1953 and let it ride through all those presidents, you'd have about $1.6 million today. That absolutely crushes the returns you would have seen if you had your money in the market only when a Democrat or a Republican held the office. And in a way, the market's performance this year supports that trend. The election is less than a month away, and polls indicate it's so close that predicting a winner with any measure of confidence is nearly impossible. You would think such a scenario would spook investors who have been told to be wary of one candidate or the other. Yet the S&P 500 was up more than 2% in September, which has historically been the worst month of the year for the market. In fact, the index is having its best year of the millennium, up 21% through the first three quarters. And while both presidential candidates continue to trot out ill-advised and inflationary policy proposals on the campaign trail - like massive tariffs on imports (Trump) or taxes on unrealized capital gains (Harris) - these are unlikely to be approved by congress. So investors who might be spooked by one candidate or the other should stop listening to alarmists and consider the following: - The economy is roaring. Second quarter GDP was revised up to a 3% annual rate, and the Fed believes the economy is growing at a 2.5% rate this quarter. Both are very healthy.
- Payrolls increased by 254,000 jobs in September, the most in six months, while the unemployment rate ticked down to 4.1%.
- U.S. productivity growth is the envy of the world. It accelerated to a 2.3% annual rate in the second quarter. That's good for corporate profits, individual incomes, and inflation going forward.
- Corporate profits - the best indicator of where stock prices will go in the mid and long term - are at an all-time high. And profits are forecast to grow at double-digit rates this year and next.
Finally, and possibly most important for stock prices, there's a veritable firehose of liquidity coming down the pipe, not just in the U.S. but globally... The Fed is clearly committed to cutting rates at its next few meetings, the European Central Bank is likely to cut its target rate again in mid-October, and the People's Bank of China is now easing rates too. That's an enormous amount of liquidity. You've probably heard the phrase "don't fight the Fed." How about, "don't fight the unified efforts of the world's largest central banks to spread massive amounts of money around"? So don't worry about the next president ruining the market rally. Other factors are more important. And currently they're all indicating positive momentum in the immediate future. And if you're looking for ways to play the upward momentum, I recommend attending the 27th Annual Investment U Conference in Ponte Vedra, Florida. These events are jam-packed with actionable advice from some of the top investing minds in the world. The theme of the event this year is America Divided, which is clearly fitting for today's market climate. Early-bird pricing for Investment U ends this Tuesday, October 15. So go here to reserve your spot not. Invest wisely, Matt | 
No comments:
Post a Comment