Chris Cice: [00:00:00] People care about elections. Markets don’t. Smart investors don’t do anything. trying to time volatility, trying to, predict who’s going to win, trying to predict, what the stock market is going to do based on any given winner is a mistake, that a lot of people make,

Mike Cice: One of the questions that we always get that we try to answer is what party has the best for market performance or what party is the best for market performance? And we find out that markets have performed well under both parties.

Chris Cice: Welcome to the GWH Steps to Success podcast. This is the podcast where I uncover the secrets to achieving financial freedom and success. Join me, Chris Cice, along with my cohost, Mike Cice from GWH Wealth Advisors, as we guide you through the complex world of wealth management, retirement, and tax planning.

At GWH Wealth Advisors, we believe that everyone deserves the tools and knowledge to shape their financial future. Now, here we are, your [00:01:00] hosts, Chris and Mike Cice.

Welcome to the GWH Steps to Success podcast. I’m your host, Chris Cice I’m here with Mike Cice and Riley Masterson of GWH Advisors and Accountants. Thank you all that joined us for our first episode on cybersecurity. But today we want to dive into the most heavily debated, most opinionized, hottest topic that comes up every four years, which is happening right now.

And that is the 2024 presidential election. A lot of questions on investor’s minds, but basically what we want to show you today is that people care about elections. Markets don’t.

Mike Cice: Thanks, Chris. One of the things that people want to know is what should they be doing now. What can we expect from now to election day as far as the markets are concerned and their investments?

Chris Cice: So we [00:02:00] expect a lot of uncertainty. It’s a highly contested, it’s a very close race between the Harris campaign and the Trump campaign, which will ultimately lead to volatility. As we get closer to election day, here we are just about a month away. You’re going to start to see a little bit of, movement in the market up and down.

Leading up to election day, which is to be expected, but at the end of the day, a lot of what happened in 2020 and a lot of what happened in 2016, where, we weren’t really clear, back in 2016, we weren’t really clear what we were getting with a Trump presidency, he’s had four years to show us, he’s, Looking to do. We have had four years of a Biden administration, and Harris has pledged to stick with most of those same types of policies. So unlike the last two elections, I think there’s more clarity this year in terms of what we’re [00:03:00] getting from both candidates. So we expect and don’t hold me to it.

Volatility beat to be a little bit less than the last two elections. However, That we could see a spike as we get closer to election day. What should investors do? Smart investors don’t do anything. trying to time volatility, trying to, predict who’s going to win, trying to predict, what the stock market is going to do based on any given winner is a mistake, that a lot of people make, and we’re hoping our clients can avoid that.

Mike Cice: Yeah, Chris, a little later in the second half, we’re going to show a chart that’ll bear that out as well. They’re better off staying fully invested, than overreacting. Now, election sparks, a lot of opinions and a lot of emotion and investors, does it really have any impact on the markets?

Chris Cice: So the answer is, not really. the election obviously it’s a personal decision when you go out and vote for someone. You may have strong opinions, for one candidate over another. [00:04:00] You may be scared of one candidate or the other one if your guy or girl doesn’t win.

But a lot of what happens in the market, a lot of what happens in the economy, isn’t necessarily impacted by who wins in November, it comes down to affecting, investor sentiment, which we’ll get into more, later on. But investor sentiment can certainly be impacted by who wins in November, but most of that sentiment is driven from their own personal biases and fears.

Mike Cice: Then knowing what we already know, we’ve gotten, pre-election up to the election. What can we expect after the election, regardless of who wins?

Chris Cice: Yeah. So generally, if we look back just in the last two elections, they were very close, Trump was a surprise win back in 2016. So there was a major knee-jerk reaction in the market following his victory, and leading into the futures market, the following day, there was a [00:05:00] big downturn in the market overnight, which, the market ultimately ended up rebounding and finishing positive on the day, following the election in 2016.

2020 was a little bit volatile following the election because we didn’t really have a clear winner. and that certainly may be the case again this year. Cause the one thing that the market does not like is uncertainty. And if we don’t have a clear-cut winner following the election this year, I expect volatility to ensue until we sort out, the results.

Mike Cice: Yeah, I agree with that. I’m hoping that we can have a clear-cut winner, at least within the three or four days after the actual election day, looking at the numbers, it seems that the president doesn’t have an effect on the stock market. What does affect the stock market?

Chris Cice: Yeah, the White House doesn’t necessarily have a direct impact on the stock market. It can, the White House can impact the economy, and certainly Congress can impact the economy with their policies. but at the end of the day, what the stock market [00:06:00] continues to look at, is the economic indicators GDP growth, unemployment rates, inflation is inflation coming up or going down.

It seems to be under control right now, but you never know. What the Federal Reserve is going to do, are they in a rate hiking, are they in a rate hiking schedule or are they on a rate cutting schedule, which they are in a cutting, Environment right now, we expect that to continue, aside from the major, economic indicators, stock pickers, mutual fund managers, look at company earnings report guidance and projections are companies, beating their earnings and raising guidance, or are they missing earnings and lowering guidance?

Those are the things that drive the stock market, not who’s in the white house.

Mike Cice: Yeah. One of the things to touch on that comes up a lot and that’s global events have a short-term effect on the stock market. You want to touch on that a little bit about geopolitical stability and international trade and the effects that has on the market?

Chris Cice: Certainly, right now there’s a lot of global [00:07:00] instability, right now in the Middle East, Russia and Ukraine. It’s nothing that we haven’t seen before in the past, but it’s certainly instability. And, with instability comes a little bit of uncertainty and that can impact, the stock market, whether it is.

If you look at just the other day, when Iran, shot missiles at Israel, the stock market dropped, but then it recovered the next day. So it’s a lot of that global instability and knee-jerk reactions in the market tend to be temporary. now whether the US gets involved internationally, that could have a much bigger impact on the stock market and the economy.

But, as of right now, that doesn’t seem to be the case.

Mike Cice: What I’d like to do is pause here for a minute and Riley has put together a number of slides that’ll give us a little bit more clarification on where we’ve come up with this research and what the statistics actually bear out as far as what happens in different types of elections. So if you want to put that first slide up.

One of [00:08:00] the questions that we always get that we try to answer is what party has the best for market performance or what party is the best for market performance? And we find out that markets have performed well under both parties. You want to explain that graph behind me?

Chris Cice: Yeah, neither party can really, claim, any kind of superior economic or market performance. They both, stock markets, perform relatively the same under a Democratic White House or a Republican White House. There’s been, a couple of times where a specific president has had, down, market under their watch.

One being, Nixon back in the seventies, mostly because of, the Watergate scandal. the second being George W. Bush, facing two major economic impacts, the first being nine, nine 11, the attacks on nine 11 had a major impact on the stock market. The second being, the global financial crisis, which started under, George W. Bush’s administration. Those are [00:09:00] the two outliers.

Everyone, all the other presidents, for the most part, have all had a positive and pretty similar stock market performance.

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Riley Masterson: Do you think those the two presidents that were down out of all those was it the president’s fault and administration’s fault or do you think that was something out of their control?

Chris Cice: That’s a good question. Obviously, 9/ 11 was outside of the president’s control, on the other hand, the economic crisis, certainly, most of the economic, the policies that he enacted caused an economic crisis. So in that case, I think maybe some of the blame could be placed on the president. But at the end of the day, when you have two sides in government, even if you [00:10:00] have, a Republican in the White House or a Democrat in the White House, you still have a Congress that has to enact policies.

And for the most part, the stock market views a split Congress as a good thing because there’s more debate, there’s more negotiation, you have to pass bills that are approved by both sides of the House and Senate. So a lot of times, if you’re going to point fingers, you have to point fingers at both sides.

Mike Cice: Yeah, with the split Congress, you get more compromise and you get less rubber stamping of certain policies, which could have a long-term effect on the economy. The most important election of our lives hasn’t mattered much to the markets. If both parties perform well, our elections as important to the stock market as it is to the voters.

And we talked about that earlier, but I think we have a chart up there that can.

Riley Masterson: Yeah, this chart I find really interesting. It is both President Biden’s and President Trump’s S and P 500 index [00:11:00] return from 2016 election day versus from 2020 election day. And looking at this chart here behind me, there’s not much of a difference between either presidency.

Chris Cice: Right, and that falls back on, investor sentiment as well. We talked a little bit about investor sentiment. If your candidate doesn’t win this election, as an investor, your sentiment may be low. You may be looking at, the economy is going to tank or things are going to be bad for me because my candidate didn’t win the White House. So it seems to get, from that standpoint, it seems to get a little choppy, but the market is a vehicle that wants to go up and it takes a lot for the stock market to go down, obviously, it does, but at the edge of the day, as consumer and investor sentiment remains strong, the stock market wants to continue to go up.

Riley Masterson: Yeah, I think that highlights too, Chris, how People need to think of the economy and stock market on as two different entities on two different railroads [00:12:00] tracks here. I know with President Biden, a lot of people were complaining about gas prices and things like that. But according to these charts, we all, and as we know, the stock market’s been doing pretty great the past couple of years, despite that.

So things like that, you need to take an account.

Chris Cice: Absolutely. And gas prices are just, part of the overall inflation picture. Energy costs, housing, food costs have all been at, forefront in the minds of most investors and most people right now. And there’s two sides to every story, but at the end of the day, there’s a lot more involved than what just the president or vice president can do about those, economic pressures or inflationary pressures.

The fact of the matter is, as of right now, the Federal Reserve seems to have handled the inflation, situation rather well. And, until we see otherwise, inflation seems to be on a good trajectory. so we should start to see a lot of those energy, food, housing, and hopefully, prices kind of level off.

Mike Cice: [00:13:00] Yes, that brings me to my next question. And looking at the data, it’s hard to see any correlation between the presidency and the stock market. But what does affect the stock market is monetary policy. And you want to talk a little bit about that? And we put that chart up behind me.

Chris Cice: Now that we know that there’s no real correlation between a presidency and the stock market, we get back to that question you asked initially is what does affect the stock market? And one of those items is monetary policy. And I just talked about the fed and are we in a hiking cycle or are we in a cutting cycle?

And right now, we just started the federal reserve, just started a cutting cycle, which is generally, good for the economy, and good for the stock market. As interest rates come down, it lowers the cost of borrowing companies, and for small business and for consumers. so we expect, in a cutting cycle, more spending, less borrowing costs, which ultimately is good for the economy and good [00:14:00] for the stock market.

Mike Cice: Yeah. And just to close, our clients, investors are asking us, are they better off staying fully insured or should they try to, make adjustments to their portfolio based on what political party, gets control of the white house or Congress? And this last chart I want to put up there, cause I think it’s rather amazing for shows that those staying fully invested.

Are going to be better off than those who try to adjust their portfolios based on elections, do you want to just review that a little bit?

Chris Cice: Yeah, a long story short, it’s better to stay fully invested, to try and, to pick, to invest, only in years when your party is in office, and be out of the market when in years when your political party is not an office, you could see those two lines. at the bottom of the graph there, if you only were invested during Democratic [00:15:00] administrations, you’re slightly better off than only being invested during Republican administrations, but nowhere near even close to getting the types of investment returns as you would have gotten if you just stayed fully invested throughout either presidency, either political parties terms.

Mike Cice: So I think in conclusion we can go back to our original premise in that people care about elections, but the markets don’t and I would just like to conclude by saying that and turn it over to Chris for our close-out

Chris Cice: Sure. Yeah. Thanks to everyone for joining us today. Obviously, our second episode, we look forward to, coming out with a new one soon. But, today touched on a lot of, timely issues. information and points about what to expect leading into the November election. What you can expect immediately following the November election, but most importantly, how to behave as an investor, whether or not your party wins or loses at the [00:16:00] end of the day, staying fully invested, staying confident in the economy, following the economic indicators.

Following consumer sentiment numbers and inflation and things like that are what’s more important way more so than, who’s sitting in the white house.

Mike Cice: Thank you.

Chris Cice: Thank you very much. Yeah. Thank you guys.

Mike Cice: We’ll see you at the next podcast.

Chris Cice: We will see you at the next, GWH Steps to Success podcast. Thank you.

And have a great day.

Riley Masterson: Thanks, guys.

Chris Cice: Thanks for joining us this week on the GWH steps to success podcast. Make sure to visit GWHAdvisors.com where you can subscribe to the show, or tune in on iTunes or Spotify. So you’ll never miss an episode while you’re at it. If you found value in the show, we’d appreciate you hit the thumbs-up button, or if you’d simply tell a friend about the show, that would help us out too.

If you like this episode, you may want to check out more content available on our website. Be sure to tune in next week for another episode filled with actionable insights and [00:17:00] financial wisdom until then, this is Chris Cice signing off.