The following post is courtesy of Diane Harrison who is principal and owner of Panegyric Marketing, a strategic marketing communications firm founded in 2002 specializing in alternative assets.
Ten years ago, I wrote a piece ahead of the midterm elections and discussed what impact an uncertain future path of governance does to the psyche and actions of the markets. Ten years on, and just ahead of the US general election, this impact is even more influential on the markets.
As always, the U.S. election results largely dictate the course of the future direction and relative strength of the US markets, which subsequently impact advisors’ decision-making for client portfolios. From my article of 2014, an updated version of the interplay between these three areas justifies a closer look at how their relationship correlates to the process of investment management.
THE ELECTION SPELLS A LACK OF MANDATED ACTION
One of the major areas of focus shared by both parties is that the candidates for the 2024 presidential seat will present a governmental body with very opposite mandates for action. Some of the concerns which were present in 2014 are still top of mind in many of today’s voters, including:
- Embracing a big pro-jobs, growth agenda
- Securing the border and stop illegal amnesty
- Holding government accountable and rein in judicial activism
- Passing a strong balanced budget amendment
- Dealing seriously with escalating tensions in the Middle East and with Russia and China
It’s a bit disconcerting to realize that these ‘action’ items for the past 3 administrations are still very much in play, and will remain so for 2025 and beyond.
THE STOCK MARKET: BELIEVABLE OR INCONCEIVABLE?
There isn’t an investment advisor working today who doesn’t have a strong opinion on the health of the US markets. With so much at stake in the overall direction of US governmental outcome, the old traditional metrics of valuating companies’ strength don’t appear to offer much in the way of a diagnostic tool for future value, and investors are still fearful of committing their capital. This pervasive trepidation makes an advisor’s job harder both to invest client money where it has the best opportunity to work for growth as well as to satisfy the client’s desire for peace of mind.
ANALYSIS PARALYSIS CAN SABOTAGE THE BEST-LAID ASSET EVALUATION
The political, economic and global themes existent today will form the backdrop against which investors will make their future investment bets. Whether these themes tend to cloud advisors’ investment decisions or shed new light on directional allocations remains to be seen. In the remaining few months of this election year, advisors, managers, and investors alike will be largely waiting anxiously for illumination on where we are all heading in 2025. Whether your chosen party wins or loses, it can be certain that we will all be living, and investing, in the wake of the presidential outcome.
Leave a Reply