Trail Financial Planning, LLC is a fee-only financial planning and investment management firm located in Bellingham, WA

3Q24 Market Review and the upcoming election

3Q24 Market Review and the upcoming election

In this post you will find information about the recent market performance, and our thoughts on what investment activity should be done in anticipation of the election (foreshadowing:  none).

What has happened in the markets

The stock market had another strong growth quarter – up by around 6%.  International stock markets were up slightly more than the US market.  Will such growth continue?  I do not know, and I do not think it is knowable.  However, I will make a forecast about the upcoming election season:

There will MANY predictions made about how the markets will react to the political election.  I forecast that about 50% of the predictions will be right, and 50% will be wrong.  Why?  Historical evidence suggests that the relationship between political events and market movements is way more like a coin flip than a coin count.  A coin flip (heads or tails) is anybody’s guess.  A coin count has some math and accounting – patterns that can be leaned on to make causal predictions.

Dimensional Fund Advisors produced a visually pleasing historical look at market behavior through different political cycles.  The link is just below this section.

In essence, the story is that politics and elections do not have any sort of patterned impact on the financial markets.  While the markets may move significantly, they might also not.  They may move up, or they may move down.  Spending time or mental energy trying to predict what will happen is an effective as spending mental time or energy trying to predict the outcome of a coin flip.

Thus, I think  prognosticating on how the market will move based on the outcome of an election is just wasted effort and breath.  Enough said.  Here is some data to back up my hypothesis:

The Dimensional Fund Advisor site may ask whether you are a client or an advisor.  You likely will have to make that selection before being allowed to view the content.  However, it should not make you create any sort of login.

What Should be Done?

Since there is no pattern, then there is no reason to do anything.  What I have experienced is this:

When democrats have won elections, my republican friends and clients think the markets are going to plummet.

When republicans have won elections, my democratic friends and clients think the markets are going to plummet.

What has happened is that the market have done as they have done – up over the long term, with short-term variations.

So, what is my advice about what to do?  I do not think we should do anything.  We (or you more precisely) should stick with your investment plan!  Should you vote and talk politics with friends and neighbors?  Yes!  Should you take any investment-related actions in anticipation of the political election?  No.

Happy Autumn everyone, I hope you enjoy the spectacle.

The rest of this message includes links to a written review of market performance and John’s audio tour of the report.

Detailed Market Performance – a watch

The following link is a less than 5-minute narrated video of market performance and other resources in this blog post.  Some people prefer a guided tour over a read.  But, the tour will be too fast to read!

The investment market performance report is prepared by Dimensional Fund Advisors (DFA), one of our partners in investment management and client support.  If you would like to find out more about DFA, you can visit their website directly at:  https://www.dimensional.com/

Detailed Market Performance – a read

To view a detailed analysis of investment performance in the US and global stock and bond markets, click on the button below.

What is Going on at Trail FP?

The Trail FP team went to San Diego to meet the people of Altruist

In case you missed it, the Trail FP custodial partnership is getting an upgrade.  Our underlying custodial partnership is moving from Pershing to Altruist.  The Trail FP team will be the same.  The service team we speak to will be the same.  Your investment strategy will be the same.  The back-back office team where lots of “investment-related things get done” is going to change.  In September, the Trail FP team went down to San Diego to meet the people of Altruist.  We were impressed, and we ate some good fish tacos…

Disclosures and end notes

Information contained within is generalized information about investing and the investment markets.  It should not be considered investment advice, personalized or otherwise.  Past investment performance is not a guarantee of future investment performance.  Investing in markets comes with an inherent risk of losing money.

End Notes

(1)  Information on the performance of the S&P 500 over time can be found everywhere.  Information about how inflation impacts those returns is little less common.  I like to look at the excellent website maintained by Nobel prize winning economist Robert Shiller.  Here is a link:

https://www.multpl.com/

Mr. Shiller has no affiliation with Trail Financial Planning, and nothing that is presented in this blogpost or on the www.trailfp.com website has been reviewed, commented on or endorsed by Mr. Shiller.

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John Chesbrough

John is a financial planner and investment manager. He, along with his business partner Elizabeth Snyder, founded, a fee-only, independent financial advisory firm called Trail Financial Planning (Trail FP) in Bellingham, WA. John and Liz enjoy working with people who care for others and their community – parents, firefighters, therapists, doctors, nurses, and teachers. They work with people by appointment. To learn more, or to schedule some time with John or Liz directly, please visit www.trailfp.com.