NOVEMBER 2024 CLIENT LETTER
November 6, 2024
Dear Valued Investor,
Donald Trump was elected the 47th president of the United States, defeating Vice President Kamala Harris thanks to strong performance in key swing states that gave him 277 electoral votes to 224 for Harris (according to The Associated Press, while five states have yet to be called). The gains at the top of the Republican ticket filtered down to state-level races, where Republicans achieved a majority in the Senate by flipping three seats to take a 52-seat majority, with several tight races still yet to be called. House control is still up in the air, but Republicans appear headed for a razor-thin majority and a GOP sweep.
For investors, achieving an outcome and removing the cloud of uncertainty is, in and of itself, a positive development. If the economy is on solid footing, as it is currently, stocks have historically reacted positively to election results regardless of outcome. We expect this time to be no different. Historically, the S&P 500 has generated an average gain of 6.5% in the year following Election Day.
Those concerned about post-election volatility can also take comfort in the fact that the best six-month period for stocks has begun. From November through April, the S&P 500 has historically generated an average gain of 7.2%. Even in post-election years, returns during these six months have been above average at 5.3%. With the economy and profits growing, inflation easing, and more Federal Reserve rate cuts coming, potential volatility around the transition of power could present a buying opportunity.
In terms of policy implications, the tax cuts enacted by then-President Trump in the Tax Cuts and Jobs Act of 2017 will expire at the end of 2025. Trump has stated he plans to extend them, though some revenue offsets, including tariff increases, are likely to limit the additional deficit spending. His America-first agenda could cause volatility in international markets, notably China, put some upward pressure on domestic prices through tariffs, and help the more domestic-focused small cap stocks (which are surging this morning). Finally, deregulation efforts may support certain segments of the energy and healthcare sectors as well as financial services and cryptocurrencies.
As we begin to put an emotional election behind us, the start of President Trump’s second term will be met with a healthy economy supporting strong corporate profit growth. The clarity of an election outcome and favorable seasonality will likely help support stocks in the near term, even after the initial bump, as the transition of power takes place. The political divisiveness won’t necessarily go away now that the election is over, but let’s hope we can make more progress bridging our divides.
As always, please reach out to me with questions.
Warmest Regards,
Wayne Rigney
Important Information
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
All data is provided as of November 6, 2024.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.
All index data from FactSet.
The Standard & Poor’s 500 Index (S&P500) is a capitalization-weighted index of 500 stocks designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.
Bonds are subject to market and interest rate risk if sold prior to maturity. Bond values will decline as interest rates rise and bonds are subject to availability and change in price.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
Past performance does not guarantee future results.
Asset allocation does not ensure a profit or protect against a loss.
This material was prepared by LPL Financial, LLC.
Securities and advisory services offered through LPL Financial (LPL), a registered investment advisor and broker-dealer (member FINRA/SIPC). Insurance products are offered through LPL or its licensed affiliates. To the extent you are receiving investment advice from a separately registered independent investment advisor that is not an LPL affiliate, please note LPL makes no representation with respect to such entity.
|
Not Insured by FDIC/NCUA or Any Other Government Agency |
Not Bank/Credit Union Guaranteed |
Not Bank/Credit Union Deposits or Obligations |
May Lose Value |
RES-0002174-1024W | For Public Use | Tracking #654508 (Exp. 11/2025)