A Place for Everything and Everything in its Place
Many of you may not remember The Twilight Zone, a Sci-Fi TV series from the early 60’s, created by Rod Sterling. I have vague memories from watching reruns as a child. One episode stuck with me. It was about a neurotic older man who was obsessed with organization and detail; to the extent it drove him crazy, and he ended up in a mental institution. He kept muttering, “a place for everything and everything in its place”.
What does a 1960’s TV episode have to do with the 2024 First Quarter Markets Review, you ask? It is about “finding a place” for the constant cacophony of election “news” that we are going to have to deal with over the next at least 7 months and maybe longer. In the past we’ve advised “tuning out the noise”. But when we are honest with ourselves, that seems impossible in today’s world. There is no way to tune out the noise, because it seems like it is the only thing people are talking about – while shopping for groceries, getting your haircut, or talking with friends and family. Somehow, the election always seems to creep into the conversation.
It is no surprise that, regardless of what side of the aisle our clients come from, it is a hot topic in almost every client interaction already –and its only April. And we get it, it is a fair question to ask and fortunately it is an easy question to answer.
There is no question that the President of the United States is the most powerful person in the world. Being the Commander in Chief of the largest military alone gives them that position. They also control foreign policy, have outsized influence on domestic policy, and the world’s largest bully pulpit with which to exert influence like no other person in the world.
One thing they have very little impact on is the economy and even less on the capital markets. Sure, in a presidential election as Bill Clinton made famous 30 years ago: “It’s about the economy, stupid!”. While that may be true in a campaign, the fact is that when it comes to governing, the President really doesn’t have much influence on the economy or markets. They can influence tax policy, trade policy, fiscal policy, and the list goes on. But the global economy is so vast and complex that even with all the influence that an American President has, it really doesn’t impact the economy or markets all that much. The graphic below sums it up beautifully.
You can find examples of Republican and Democratic Presidents who had wildly different views on all sorts of policies who had presided over very strong stock markets. And for those of you who are not political junkies, there were Republican controlled Congresses, Democratic controlled Congresses, and split Congresses during the time frame above.
If you think about your own personal life, do you expect to buy fewer groceries or clothes, spend less on insurance or transportation, based on who wins the election? Probably not, and you are not alone. Individuals, businesses, state, and local governments are all going to move forward with their lives and their personal priorities regardless of who is President or in control of Congress. And it is that behavior that drives the economy and the markets over the long run.
Hopefully the takeaway from this piece is that one thing you don’t have to be overly concerned about during these challenging times is the impact the presidential election will have on your portfolio and even less so on your long-term financial plan.
We hope you can find ways to compartmentalize the election news overload, be it creating technology free days on the weekend, no podcasts workouts or walks, meditation, or simply telling your friends and family that you want to talk about anything but the election!
As always, we are here to answer any questions and we look forward to hearing from you on ways we can improve our ability to give you the peace of mind you deserve.
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