As we turn the corner from the election season that dominated the 2024 news cycle, we have results and perspective for what’s next when it comes to investments and the economy.

Former President Donald Trump won the electoral college decisively solidifying a GOP victory in tandem with congressional Republicans with a defeat of Vice President Kamala Harris and loss of seats for Congressional Democrats. Our country is sharply divided, but also that the electorate pushed back against the status quo embracing change similar to 2020, but this time in the reverse direction.

Keep Perspective

Politics are personal and we know that we all view the economy and markets through a lens of our partisan preferences. If you are a democrat and thought things were going well with the economy, you’re likely to feel more pessimistic today. If you are a republican and felt that we were moving in the wrong direction, you’re likely to feel more optimistic now. Don’t let the lure of identity perspectives obscure your point of view on the economy and investments.

We continue to see data indicating we have a growing economy with low unemployment and declining inflationary trends. I often say that the economy and markets don’t care who is president, and your investing time horizon is much longer than the US two and four-year election cycle. Don’t be swayed by fear or greed based on DC politics.

Rely on Process

For clients of Pearl Planning, investment process trumps investor sentiment or vibes. Maintaining processes, especially in times of transition, is the hallmark of a sound and enduring investment strategy. For now, focusing on rebalancing investment portfolios to fit with your target investment allocation, monitoring your savings targets and cash needs, and keeping portfolio costs in check are great process examples where you can “focus on what you can control.”

On the Horizon

It can seem easy to predict what to expect for a new governmental regime. When that mixes with investing, predictability often goes out the window. While alternative energy had stunning returns during the first Trump term, energy has done exceedingly well during the Biden presidency. Conventional wisdom’s predictions would have reversed these outcomes. Here are some things we will be focusing on in the coming months:

  • Tax Agenda: The Tax Cuts and Jobs Act, enacted during President Trump’s first term, is set to expire at the end of 2025. A likely extension or new tax legislation is likely to be on the agenda early in the next term. As financial planners, we approach tax-related changes individually, taking each client’s unique circumstances into account. Tax-savvy guidance is essential to our work together, and we prioritize understanding tax implications as part of comprehensive financial planning. However, please note that our advice does not replace accounting expertise, and we encourage working alongside tax professionals.
  • Economic Policy: A lot of promises were bantered about by both candidates in 2024, but a specific economic policy remains more conjecture than black and white. Time will tell what will be changing and how it will impact families. A resilient investment strategy coupled with the hallmarks of a financial plan – built for a variety of environments – may be an antidote for uncertainty.
  • Regulation: For the investment profession, specifically, we’ve been subject to a variety of changes regarding SEC regulation for the past 16 years. More change and uncertainty are likely to come. During the first Trump term, environmental, social, and governance investing (ESG) was a particular focus of regulatory scrutiny. This will likely reemerge as a regulatory focus while other impending rules might be set aside.
  • Maintain Optimism: Fear sells, but we believe in a process grounded in risk-aware optimism to help clients pursue long-term investment goals. By balancing risk and potential reward, we aim to navigate market changes thoughtfully and with a focus on each client’s unique path forward. History’s track record shows that it’s better to favor investing across presidential terms rather than cherry-picking your favored candidates.

Later this month, we’ll be publishing our year-end tax and financial planning video. As always, our focus will remain on resilient financial plans built to manage your money as a critical enduring resource for you and your family.

If you have questions, please don’t hesitate to contact our office at 734.274.6744.