Market insights and analysis

How dynamic, risk-managed investment solutions are performing in the current market environment

3rd Quarter | 2024

Quarterly recap

News

rss

Current market environment performance of dynamic, risk-managed investment solutions.

By Will Hubbard

As we approach the end of the 2024 presidential election, the “most contentious election in our nation’s history,” as I hear some pundits say, the impact of this historic event on markets weighs heavily on investors’ minds.

For many, it feels like the future of the nation—and their financial well-being—rests on the election’s outcome. It’s easy to worry that if one’s candidate loses, the market (and the world!) might face a sudden, irrecoverable decline. But history suggests that markets and nations are more resilient than we might assume in moments of heightened uncertainty.

What history teaches us about resilience

When I hear people tell me with great concern that if their candidate doesn’t win, then “we’re doomed as a nation,” I find the futile attitude to be a little off-putting because it doesn’t offer any perspective. It’s a statement that has a high probability of being wrong.

To put election worries in context, it’s helpful to consider how past leaders confronted challenges and uncertainty. For example, the fall of Rome serves as a reminder of what can go wrong when leaders lose sight of long-term stability. Beginning around 235 AD, Rome entered a period of internal turmoil, marked by military uprisings, shifting loyalties, and ineffective rulers who struggled to create a unified vision for the empire. Despite numerous attempts to stabilize, Rome ultimately fell to invasions and internal division, lacking the cohesive structure and foresight needed to endure.

In contrast, America’s Founding Fathers were keenly aware of these lessons from history. Leaders like Alexander Hamilton and Thomas Jefferson, despite their deep ideological differences, built a system with enduring principles designed to withstand uncertainty. While Hamilton championed a strong central government and financial infrastructure—laying the groundwork for the Treasury and the banking system—Jefferson expanded American territory with the Louisiana Purchase, envisioning a prosperous future for generations. Their legacies are rooted in a shared belief in building a resilient republic, even if they disagreed on the path.

Markets find stability in uncertain times

Much like the Founding Fathers’ long-term vision, markets are forward-looking, often stabilizing once the uncertainty of an election passes and policy directions become clear. The reality is that on Wednesday morning, businesses will continue to open their doors, aiming to deliver value to customers regardless of political outcomes.

Historical data also supports this. Bespoke Investment Group found that during an election year, the S&P 500 has increased in value leading up to Election Day 79% of the time since 1928. Among those years, the remainder of the year was positive 79% of the time. This means that if the market is up leading into an election, there is a 79% chance that the market will end the year higher than it is on Election Day. This pattern is partly why our Political Seasonality Index (which can be found post-login in our Weekly Performance Report section under the Domestic Tactical Equity category) positions long ahead of elections, drawing on historical trends rather than speculative predictions.

How FPI’s approach can help

Investors should not let election anxiety and political biases impact their investment perspective. That’s where talking to your financial adviser and working with professional wealth managers like Flexible Plan Investments (FPI) can help.

Just as our nation’s founders laid a foundation of resilience, FPI helps investors build enduring portfolios. At FPI, we understand that the most effective way to navigate market ups and downs is through a dynamic, risk-managed approach. Our strategies are designed to adapt to evolving conditions, helping investors remain focused on their long-term goals, rather than short-term headlines.

In a world where uncertainties are constant, a disciplined approach to managing investments allows investors to find stability—even when the headlines are anything but. We’re here to provide data-driven insights and proactive management so that political events don’t cloud investors’ judgment about their portfolios.

Half the country isn’t going to vote the way I do tomorrow, and I’m OK with that. We’re here to manage investments thoughtfully and proactively, to grow and protect wealth, not to push a political narrative on the economy or other investors.



Comments are closed.