October Update - Do Elections Affect Market Performance?

Money is a tool. It's something that supports your life!

Federal Reseve cuts key rate as expected to 4.50%

Does it Matter Who's President?

As the 2024 U.S. election nears, the two most frequently asked questions we are hearing from clients are: “What are the implications for the economy?” and “What should I be doing with my portfolio?” Politics do not drive long-term investment performance, fundamentals do.

Corporate America — and the markets that reflect it — has survived dozens of election cycles as well as numerous troubling headlines on its long-term march higher. Company progress, and ultimately portfolio performance, is much more closely tied to corporate fundamentals and economic cycles.

There are numerous examples of prior election cycles where markets or specific industry sectors were expected to perform one way based on a specific election outcome, only to end up in the exact opposite direction after the fact. That said, there are several key fundamental issues up for debate in the next couple of years which will undoubtedly be influenced by the party composition of the Executive and Legislative branches. These include reinstating or letting expire some of the Trump-era tax cuts (Tax Cut and Jobs Act of 2017 expires in 2025), and renegotiating the United States-Mexico-Canada Agreement (USMCA) which faces a built-in automatic review in 2026.

 

Planning Tip

Our Portfolio Management Approach:

*Hopefully everyone has a chance to listen to our podcasts* 

Click here to go to our Financial 50 Podcast Page

Click here to go to our Market Commentary Podcast Page

 

We are fundamental investors that use technical analysis to manage short-term market risks. We believe that risk management is not a choice, but a necessity. While we cannot control how much downside the market provides during a correction, we can control how much of the downside your account receives. We aim to avoid 60% or more of the decline in any significant downturn. Without our process, there is a good chance you will experience 100% of the downside from the market. We will help you navigate the risks and rewards of the market so that you can stop worrying about your money and start living your life.

 

Transactions:

September was a very quiet month in the portfolios. We did NOTHING but watch. September is traditionally a volatile month but this September it was quiet. We are still holding around 20% in cash as we still have earning season starting in October and the U.S. Elections. Cash is still paying over 4% and we are looking for an opportunity to deploy the cash.

 

Returns on our 60/40, 70/30 & 80/20 Portfolios before fees:

 

Interesting Charts:

Every month Stephen has some fun and educational charts and images to share. Ashley likes to pick her favorite - which this month is the chart below. Ashley fights hard for younger generations to get ahead in life, and she just LOVES to see charts that help portray the cost of living in today's world:

 

Technical Comments

 https://www.brookstradingcourse.com/price-action-trading-blog/

• The September Monthly candlestick was a bull bar closing near its high with a long tail below.
• Last month, we said that the odds slightly favor the market to trade at least a little higher in September. Traders would see if the bulls can create a strong retest of the prior all-time high followed by a breakout above or if the market would trade slightly higher but stall around the all-time high area instead.
• So far, while the market has made a new all-time high in September, it did not close significantly higher than the July high.
• The bulls managed to create a retest and break out of the July high, closing in the new all-time high territory.
• They hope that the market has entered a broad bull channel phase which will last for many months.
• They want any pullback to be sideways and shallow (filled with weak bear bars, bull bars, doji(s) and overlapping candlesticks) and form a higher low or a double bottom bull flag with the April 19 low. So far, the bulls got what they wanted.
• Next, the bulls want another leg up completing the wedge pattern with the first two legs being the March 21 and July 16 highs.
• They also want the third leg up completing the embedded micro wedge pattern with the first two legs being the August 30 and September 26 highs.
• The bears see the current move as a retest of the prior all-time high (Jul) and want a reversal from a higher high major trend reversal or a double top.
• The problem with the bear’s case is that they could not create bear bars with follow-through selling.
• The long tails below August and September candlesticks indicate the bears are not yet as strong as they hoped to be.
• They need to create some bear bars with follow-through selling to show that they are at least temporarily back in control.
• Since September’s candlestick was a bull bar closing near its high with a long tail below, it is a buy signal bar for October.
• Odds slightly favor October to trade at least a little higher.
• The market remains Always In Long.
• Traders will see if the bulls can create another strong breakout into new all-time high territory.
• Or will the market trade higher but stall and close the month’s candlesticks with a long tail or a bear body instead?

More Planning Tips

How can I transfer wealth built up in my company to my heirs tax effectively?

You have currently invested excess surplus in your company in a passive investment portfolio and wonder if there is a better option for you today and for you heirs in the future.

Click here to read more!

 

Millennial Minute

Ben Franklin said it best: "...but, in this world, nothing is certain except death and taxes."

We can't escape taxes, even after we're gone, but are there ways we can lessen the tax burden on our estates and on our beneficiaries? 

Today's article is more for the parents of Millennials and Gen Zs, but it's information that everyone can certainly use.

Click here to read more!

 

 

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