With the election hysteria settling down, we have a few thoughts.  As it appears today, just about a week after Election Tuesday, it looks like we will have a split government with Democrats holding the Presidency and the House of Representatives while the Republicans remain control in the Senate.  This is, of course, assuming nothing changes materially between now and the inauguration. 

History has told us that markets have performed best while having a split government and having a split government is thought to be a large contributor to the positive market activity we have seen in the days following election day.  Having a split government could make passing large legislative changes such as, corporate tax hikes, personal tax increases, and further company regulation, much more difficult.  If something were to get done in that regard, odds are it would be much more moderate when compared to what may have been passed while having one party control government. 

One other positive we see is that another stimulus package is likely to be rolled out soon.  There is some consideration that this package could be more robust with a Democrat in the White House than if Trump were to hold the office but that is yet to be seen.  The past stimulus package did help many Americans keep businesses up and running or promote spending which is a large driver of the U.S. Economy.  We do not feel we are out of the woods yet in regards to the COVID-19 pandemic, however it was announced on Monday the 11^th, the Pfizer vaccine seems to have a 90% effective test rate two weeks after the second dose.  Also, many economic indicators are out ahead of what many thought possible in March of this year and for those reasons, we are optimistic. 

For those of you that are not familiar with Capital Group, home of American Funds, they have managed investment strategies though various funds for over 85 years to help clients achieve their investment objectives. They are one of the many tools and resources Excalibur uses when it comes to economic research. They also provide easy to read articles addressing market trends and statistics that we find clients enjoy to follow. Hopefully you find their “Guide to Election” piece below as interesting as we did.

With elections right around the corner, a question on many of our clients’ minds have been, “what should we do with our accounts in preparation for the election”. These questions and concerns have not only been with our clients, but investors all over the world. With these unknowns looming in our minds, we will share some statistics and facts regarding how markets react in elections years.

• U.S. stocks have trended up regardless of whether a Republican or Democrat won the White House. A $1,000 investment in the S&P 500 Index when FDR became president in 1933 would have been worth over $14 million today. During that time there have been seven Republican and seven Democratic presidents.
• Primary season tends to be volatile, but markets have bounced back strongly afterward. Stocks have returned 10.2% in the 12 months following primaries, compared to 5.8% in similar periods of non-election years.
• Investors often get nervous and move into cash during election years. Net asset flows into money market funds have been more than three times higher in election years than in non-election years.
• But staying on the sidelines has rarely paid off. It’s time, not timing, that matters most. Stocks have had negative returns in only two of the last 20 election years (2000, 2008), and both declines were largely attributed to asset price bubbles rather than politics.

To learn more about the effects of election years and investor’s behavior, please visit:
https://www.capitalgroup.com/advisor/insights/articles/3-investor-mistakes-election-year.html
On the right-hand side of that webpage, click on the blue download box: “Guide to investing in an election year”

Source: Huntington, C., Polak, D., Ward, S., Barrett, B., Wendt, G., Romo, M., & Jonsson, J. (n.d.). 3 mistakes investors make during election years. Retrieved September 17, 2020, from https://www.capitalgroup.com/advisor/insights/articles/3-investor-mistakes-election-year.html

We are proud to announce that Connor and Ryan passed their Certified Financial Planning exam on March 17, 2020. This was no easy task and required relentless studying before and after work, submissions of full comprehensive financial planning case studies and 6,000 hours of professional experience in addition to their bachelor degrees attained in college. 

The CFP® certification has been the standard of excellence for financial planners and shows Connor and Ryan’s commitment to always improving their knowledge and tools available to do the very best job for our clients not only now but also in the future. 

We are extremely proud of them and look forward to the bright future we have ahead of us at Excalibur Financial serving as your financial stewards.