Exploring Post-Election Market Trends

Host: 00:01:00

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Amy Irvine: 00:01:48

Hello, moneyroots listeners. Amy Irvine here, CEO and founder of Rooted Planning Group. Today, joining me is our cio, which is Chief Investment Officer Carrie Bean.

For us to have a quasi jam session, I guess you want to call it, on the post election market outlook. Thoughts around this particular topic, some ideas, what we're sharing.

In general, just for some education purposes, of course, anything that we share with you cannot be guaranteed in any way, shape or form. They're just thoughts that we have.

And, you know, we know that this is on a lot of people's minds right now, so we just thought we'd get together and kind of think it. Think it out loud, I guess you want to say, or think out loud and share some of our thoughts with you. So, Carrie, welcome to the podcast.

Or should I say welcome back? Sure.

Kerrie Bean: 00:02:35

Welcome back. Been on here a lot lately.

Amy Irvine: 00:02:38

Yeah.

So, Carrie, I know that we have been over the last few days, you know, it's basically been about a week, a little over a week as we're recording this, that, you know, the election results have come in and we're trying to depict, you know, what is. What is policy going to be looking like? What are things going to look like in general under a second Trump term?

And not just a second Trump term, but also a Republican House and Senate. Right. So this is very different than the first Trump term. So in that respect. So I know you've done some research on this particular topic.

nder various presidents since: 1933

Kerrie Bean: 00:03:38

Yeah, so I think the very first thing that stuck out to me is that the market does what it does regardless of the political party in office. But the second piece that stuck out is that the market, they do like more of a balance than we've gotten.

So that's one thing that, you know, time will tell what, what that means for the market and for the economy.

So yeah, those two things, you know, I think the election can be a distraction, but it, it does, you know, have some impact regardless, you know, looking forward. So we'll, we'll see.

But that's the two things I think that were interesting in some of the research was political party isn't necessarily important always, but the market does sort of lack a little bit of balance for the most part.

Amy Irvine: 00:04:36

Definitely. Yeah.

nt control. This goes back to: 1933

It excludes: 2002

But historically speaking, when a Democrat is in the White House, the market overall has performed at about 14.5%. So that's regardless of who's in Senate and Congress, you know, controls Senate and Congress.

It's just if a Democrat is in the White House, the market performance has been about 14.5.

Now if it's a Democrat in the White House and it's a Democratic Senate and Congress or Senate in House of Representatives, over the last 36 years, it would be about 13.6%. So when I say over the last 36 years, that means like during a 36 year period when it's like that, that the performance has been about 13.6.

Now when there's a Democrat in the White House and there's a Republican Congress and you know, so Senate and U.S. representatives, it's about 18.2%. So that's that balance of power that you were talking about Kerry out of all.

And then if it's split, it's about 14.8%.

So thinking about what I just said, when you have a Democrat in the White House but your Congress is actually controlled by Republicans, that actually provided the best rate of return.

perspective, again excluding: 2002

So if we're dating back from: 1933

Or 16.1. So about 2 percentage points lower than when Democrats are in the White House and the Congress goes controlled by Republicans.

And then on the split side, if it's Republican in the White House and then it's split, you know, so like one side is the House and one side or Democrats, Democrats are either the House or the Senate and Republicans are the other, then it's about 11.2, which is down just under 3%.

So overall speaking actually the market tends to perform, historically speaking, the best when a Democrat is in the White House and there's a Republican Congress. Now that's not to say that it doesn't do well in other years. It's just the numbers tend to be higher when there's Democrat in the White House.

That's just, you know, the numbers.

Kerrie Bean: 00:07:53

Yeah, well, and I think the big takeaway is it, it's still in a positive direction. I mean, kind of regardless of what's going on, I think it's, it's headed for the most part.

You know, his, you know, history isn't always a predictor of the future, but it's headed in a positive direction and regardless.

Amy Irvine: 00:08:13

Potentially. Yeah. Yeah.

So I guess that's one of the, Yeah, I think that's one of the things that's important for people to understand is that, you know, and we don't know, maybe this would be an exception to that rule. We have idea, but those are the averages because people often ask, you know, what do you anticipate is going to happen?

And we're like, well, if history is anything, you know, like if the future is anything like history, then we would expect, you know, things to increase.

again, this is going back to: 1933

So that's the one year average lag, but yet the average annual return is about 14.5% for Democrat presidencies and 10.7 for Republicans.

So what that says to me is that sometimes there is a little bit of pop, I guess, in the market the year after a Republican, you know, slightly, it's 0.9% difference, right. Slightly more, but not that far off really. I mean, you know, when you look at those numbers and say 12.1% versus 13, that's not a huge variation.

And again, these are all averages and just historical information, but when you look at the overall return, there's a little bit of a difference there.

So again, going back to, you know, we don't know if this is going to be a typical, you know, cycle, but that's been some of the questions that I know I've been personally asked over the last couple of days are what are, what are, what should we expect? Yeah.

So, yeah, and when you think about, just from a standpoint of like you said, the biggest thing that stands out to you is that what things, when things really do well is the best, I should say is when there's a balance of power that tends to do, the overall market tends to do the best. Have you noticed any other trends that have been happening since the election?

Kerrie Bean: 00:10:28

I think, you know, there's obviously a little excitement and emotion around a lot of it and it had, did cause I think it maybe increases the volatility a little bit. But overall I think it's just that consistent theme of thinking long term and not getting tied up, you know, in the short term.

And I do think it's, you know, one thing that's important is having a plan and a strategy that makes sense and reviewing your portfolio and thinking about how things are performing but not getting hung up on the, on the short term kind of what's going on?

Amy Irvine: 00:11:08

What's going on right now? Yeah, yeah, yeah, yeah. You know, I can't remember who wrote it or who said it, but we've repeated it many times.

Markets move on a daily basis based on fear and volatility, but over a long term basis they move on growth and economic news. And I think right now there's definitely a lot of concern on all aspects of things. Right.

I just think there's a lot going on right now in general that people just have concerns on as a general rule. And I think one of the things that I've also heard a little bit about has been around bond yields.

Now I think it's important for us to take just a moment to talk about Bond yields, because this is always an area that people get so confused on around bonds. So when we have bonds, what happens in the, like just kind of take a moment to explain how bonds work.

So you buy them, they have a face value, which is what things mature at. What happens when we have inflation? What happens to a bond that you currently hold when we have inflation?

What happens to the price of a bond when we currently have inflation and the Fed raises interest rates?

Kerrie Bean: 00:12:21

The price of the bond goes down.

Amy Irvine: 00:12:23

Correct. The price of the bond goes down.

So in a period of time, going back to what I was originally asking, we've had some people say, I don't understand why bonds were so negatively affected by the election.

Why are we seeing bond prices fall when the idea is that in reality, if the Fed is going to continue to lower interest rates, they must think that the economy is slowing down.

And yet bond prices significantly fell even though the Fed didn't do anything and in fact didn't come out and say anything about interest rates until earlier this week. But why right after the election do you think that bond prices fell so much?

Kerrie Bean: 00:13:06

I think it's just the fear of the unknown. You know, what's the new policies going to do? How is it going? What are the tariffs going to do? It's just that fear of the unknown.

Amy Irvine: 00:13:16

And possible fear of inflation.

Kerrie Bean: 00:13:18

Yeah. And I think everyone kind of thought that, you know, interest rates were going to be coming down maybe more quickly than now. We think they are.

So that, you know, that kind of had a reaction in the bond market and changed things a little bit.

So just the, I think the upcoming, you know, new administration, we'll see if some of these changes are going to actually go into effect and what's going to happen. But I think the market's now saying, okay, if these things really do happen, what does that mean for the bond market?

Amy Irvine: 00:13:50

Yeah. Are we going to see inflation rear its ugly head and could that then affect the prices of bonds?

And I think that they've reacted on exactly what I said earlier. Short term reaction is on fear. Right.

So there's some fear that, great, our economy is going to grow, but is it, are we able to actually absorb that at this point in time? Is, is there going to be a pause?

r rate decrease this year for: 2024

And then based on some of this, you know, some of the underlying fears, not just what happened with the election, but also some economic data that came out about September that maybe things aren't slowing down as much as the Fed thought they were. You know, so. So are they going to pause raising or lowering interest rates, or are they going to continue to lower interest rates?

red fully from the decline in: 2022

rn on that front. In fact, in: 2022

not down. Like if we look at: 2008

e saw fixed income. And so in: 2007

on the fixed income side. In: 2015

hat kind of negativity. So in: 2021

ly seen within a period since: 2006

So it's very interesting times on that front. I know that we want to keep this relatively short in nature. Any other thoughts that you want to share?

And I know you're going to be producing some stuff for clients to have information on as well and sending it out to them, but is there anything that you thought it would be important to share with folks as we sort of wrap up this podcast regarding this topic?

Kerrie Bean: 00:16:50

I think the two again, and I hate to be repetitive, but understanding and educating yourself on a lot of it is really important. And knowing, you know, that the short term fluctuations may just be noise. And it is important to look at the bigger picture.

But also don't ignore and put your head in the sand and just assume that, you know, you're invested how you should be.

I think it's really important to be aware and know what's going on, but not make emotional, you know, decisions based on maybe noise, but make your decisions on facts.

Amy Irvine: 00:17:27

Yeah, yeah. I think that's waiting for policy to actually be clearer before any major moves are made.

Well, Kerry, thank you so much for joining me today and having this conversation around things that people are very concerned about.

e and more and certainly into: 2025

And if you have any questions or would like us to cover a specific topic, please feel free to reach out to us at AskRPG or Moneyroots AskMoneyroots and we'll be happy to try to record some additional topics on this. Thanks everyone.

Host: 00:18:18

You've been listening to Money Roots, your Go to podcast for making personal finance accessible and approachable. Thanks for joining us today. Amy and her guests have enjoyed guiding you through the roots of your financial journey.

Remember, whether you're planting new seeds of financial knowledge or nurturing the growth of your existing financial plans, Money Roots is here to support you every step of the way. Be sure to follow them on Facebook, X link, LinkedIn, and Instagram for more resources.

And of course, subscribe to moneyroots wherever you get your podcasts so you never miss an episode. A big thank you to the sponsor, Rooted Planning Group, for making this show possible.

At Rooted Planning Group, they're committed to helping you cultivate a thriving financial future. Until next time, keep growing your Money Roots.

Amy Irvine: 00:19:11

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