First, a quick win: markets recently posted a strong rally on better-than-expected inflation data.1
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 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.
And, 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 am deeply, abundantly grateful.
For my health.
For the food in my fridge.
For the roof over my head.
For my circle of family and friends.
For my community that has given me a home.
For my amazing clients and partners who have given me a vocation.
May you and your loved ones enjoy a wonderful Thanksgiving full of joy and memories.
So, what are you grateful for today?
Risk Disclosure: Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Past performance does not guarantee future results.
This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. The content is developed from sources believed to be providing accurate information; no warranty, expressed or implied, is made regarding accuracy, adequacy, completeness, legality, reliability, or usefulness of any information. Consult your financial professional before making any investment decision. For illustrative use only.
The S&P 500 is an unmanaged composite index considered to be representative of the U.S. stock market in general. Indices are unmanaged and cannot be invested into directly.
Past performance does not guarantee future results. Investments and the income derived from them fluctuate both up and down. Investments at Dightman Capital (DC) are subject to risks including loss of principal. This presentation is for informational purposes only and is neither an offer to sell or buy any securities. Benchmarks or other measures of relative market performance over a specified time are provided for informational purposes only. DC does not manage any strategy toward a specific benchmark index. A variety of sources we consider reliable have provided information for this presentation, but we do not represent that the information is accurate or complete. DC does not provide tax advice to its clients. Investors are encouraged to discuss any potential investment with their tax advisors. The material provided herein is for informational purposes only. For additional information on DC, please see our Form ADV Part 2.