I’ve got a quick note about markets and elections for you, plus some big-picture questions about gratitude at the end.
First, a quick win: markets recently posted a strong rally on better-than-expected inflation data.1 I’ve been saying this for a while now, it will take time for inflation to come down. But for now, the raw material inputs and major purchase categories have been slowing down and this should eventually lead to lower inflation data ahead. I’m highlighting this win because it reinforces a fundamental lesson about long-term investing: you want to be in the market when it moves. Not on the sidelines. If you’re on the sidelines, you miss out.
Ok, lesson over.
Let’s talk about the midterm election and how it could impact markets.
Regardless of our personal feelings about election results, history tells us that markets generally prefer a divided government.2
Why? Markets like certainty and with divided government, they are almost certain to get nothing accomplished. This suggests, no new taxes, major spending bills, and what does get done will take a compromise. Plus, splitting governance between both parties typically means fewer sweeping policy changes that could introduce uncertainty.
You can see in the chart below how markets have performed (on average) depending on which party-controlled Congress when a Democrat was in the White House.
Does this mean we can count on a rally?
No. Mainly because markets are driven much more by fundamentals and economics than politics, but political gridlock is not always good. Brinksmanship over issues such as debt ceilings, federal budgets, and government shutdowns could cause instability and market volatility.
It’s easy to let the whirlwind of headlines and uncertainty draw us into short-term thinking and worry about the future.
But what if we consciously paused and asked a deeper question?
What are you grateful for right now?
I ask because gratitude pulls us away from the daily stressors and irritants to remind us of what truly matters.
I’ll start.
I am deeply, abundantly grateful; for my health, the food and friendship we will enjoy this Thanksgiving Day, family and friends, our communities, and most importantly you! I’ve had the privilege to call many of my clients friends for 15 plus years now. My family has heard your names mentioned at our dinner table, we’ve said a few prayers for you when needed, and we our forever grateful to hear all the wonderful things which continue to bless us all.
One last thing before we enjoy our Thanksgiving week festivities and if you’ve read this far, please consider the following. Some of you participated in our son Brandon’s Lacrosse Fundraiser last year. I believe if I’m asking you to give, I should participate as well. I will match dollar for dollar up to $500 in this effort. What is it for you ask? Our Veterans who sacrificed so much for our country and so that we may continue to live in freedom. Over the last three years, Brandon and his lacrosse team have participated in Wreaths Across America. Wreaths Across America goal is to provide a wreath on every Veteran’s headstone in Veteran Cemeteries throughout the United States. Not only is this a great thing to honor our Veterans, but to also remind our children who heroes really are and the true meaning of sacrifice. You may click the following link to participate, and you can select any Veteran’s Cemetery throughout the United States. One wreath can be purchased for $15. Wreaths can be purchased until November 28th.
https://www.wreathsacrossamerica.org/pages/168084
Thank you from the bottom of my heart for your trust and partnership this year. May you and your loved ones enjoy a wonderful Thanksgiving full of joy and memories.
Warmly,
Jeremy Ftacek, AIF®
Ftacek Financial Services, LLC.
www.FtacekFinancial.com
We work primarily by referrals and appreciate your introductions.
Illinois Office: 1000 Essington Road, Joliet, Illinois 60435 | 815-577-9125 | Fax: 815-577-9135
Tennessee Office: 4018 Kings Camp Pass Arrington, Tennessee 37014 | 615-591-2490 | Fax: 815-577-9135
Sources:
- https://www.cnbc.com/2022/11/09/stock-market-futures-open-to-close-news.html
- https://lplresearch.com/2022/11/09/midterm-election-results-point-to-more-mixed-government/
Chart source: https://lplresearch.com/2022/11/09/midterm-election-results-point-to-more-mixed-government/
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