November 2, 2024 | Investing
We’ve been hearing some great questions in our meetings lately surrounding the current market conditions and the upcoming election. Let’s dive into two of these today:
Note: This video was originally produced for our monthly client newsletter, Guidepost.
This is such a natural feeling, right? When things are going well, we so often begin bracing for the “other shoe to drop.”
But instead of giving in to that unease, let’s take a step back and look at the bigger picture to get some perspective.
If we simplify the long-term trend of the U.S. stock market over the last century, it would look like an upward-sloping line:
When you zoom out, U.S. stocks have historically trended up over time. This line represents why you invest in the first place.
Of course, we all know there are no guarantees and things can change, but this long-term trend illustrates the opportunity of being invested. This growth has happened because of a few big, durable, and long-running factors that don’t grab many headlines like increasing productivity and population growth.
So, why does investing still feel nerve-wracking?
Because, alongside the long-term growth is this secondary trend of short-term fluctuations. Picture these fluctuations like waves:
These are called market cycles.
Shorter-term factors like quarterly corporate earnings reports, inflation readings, jobs reports, and global events drive these market cycles. We never know exactly when the waves will start, how long they will last, or how big they will get, but we DO know the wave cycle is inevitable.
Right now, we’re seeing some positive signs driving the market upward, such as:
At some point, though, the short-term wave will naturally pull back down. The reasons could be endless. It’s simply the cycle the market goes through.
The key is to look at both trends together:
This has been the full picture. Historically, U.S. stocks have trended upward with short-term fluctuations along the way.
That’s why we’ve always said it and will continue saying it—we PREPARE for whatever the markets give us rather than trying to PREDICT or time the market cycles. This allows us to “ride the waves” so you can stay invested to capture the long-term trend.
If you’re a LifeGuide client, your Financial LifePlan is designed to prepare you for various market conditions, so you can embrace the long-term opportunity while being ready for what’s next.
Naturally, this is a big one on many people’s minds, especially with emotions running high in another contentious election season. But here’s the reality:
Data shows that, historically, the markets have moved forward regardless of whether a Republican OR a Democrat has held office.
Let’s take a look at this chart from Capital Group:
We usually see more short-term volatility leading into an election, but after the election the markets figure out what’s going to change and then adapt; just like we all do. The sun rises the next day, and we all keep moving forward.
So, going back to the original question: “What’s going to happen if _____ wins the election?”
Well, based on the data, as far as the markets are concerned, things will carry on.
The same was true today as when we talked about this back in 2020!
Whatever your political beliefs, please do not lose sight of the long term. It’s easy to get caught up in sensational headlines, but history shows that, with a sound plan in place, staying the course is almost always the better approach in the end.
Ultimately, my prayer for you—and for all of us—is to use any fear or anxiety as an invitation to lean deeper into faith. As Christians, our hope should be rooted in Christ and His Kingdom and never in any investment account or political outcome.
I want to leave you with this: I was talking to a friend recently who put it beautifully. He said, “God is not running for office.” It’s a reminder of the truth we find in Psalm 103:19 — “The Lord has established his throne in the heavens, and his kingdom rules over all.”
So, no matter who wins next week, remember, God remains in control. If you have more questions or just want to talk, don’t hesitate to reach out. We’re always here to help!