Hello WestHill clients and friends.
Depending on which side of the political fence you sit, you are either jubilant or depressed about how the national election played out. Whether you are happy or sad, it should be noted that our country has many checks and balances in place to ensure that no single leader or party can dictate without debate what direction our country goes. Our forefathers from centuries ago were great thinkers beyond their time. They created a system that ensured open discussion without fear of reprisal. Our country has survived tumultuous times in our past, and it will yet again survive and thrive now and into the future.
When it comes to your investments, it is important to remember what stock market performance is based upon: Corporate Earnings. The stock market is constantly predicting the future for corporate success and economic advancement. Historically, Republicans are very business friendly. It appears that the Republicans will control both the White House and Congress. From an individual and economic standpoint, Republican control of Congress stands to benefit most households when it comes to taxes and income.
Additionally, in year 2025, a major piece of legislation is up for debate. The expiring 2017 Tax Cuts and Jobs Act (TCJA) will sunset by the end of next year. With Republicans in control, the most likely outcome will be low tax rates continuing past year 2025, therefore influencing economic advancement and solid corporate earnings.
As always, the future is impossible to predict. Trying to time the market is virtually impossible. What we do know is that the market is often volatile. It rarely moves in a straight line, and downward moves of 10% or more are to be expected on an annual basis. However, if you stick with your investment plan, you are bound to reap the benefits of positive annual market averages if given enough time.
During President Trump’s first term from 2017 to the end of 2020, the S&P 500 went up by roughly 63% over the course of 4 years. Whether you like him or hate him, the markets generally view Trump favorably. However, our country faces major issues that require attention, most notably, our ballooning national deficit, structural issues with Social Security and Medicare, and our continued battle with inflation. Therefore, it is not fair to expect similar market results over the next four years, as compared to Trump’s first term.
In closing, we want to highlight that we are all in this together. For as long as we can remember, our country has faced major hurdles, yet always come up with solutions to fix problems and move forward. Sometimes the issues created short uncomfortable periods, but we have always risen to the occasion, even when the problems seemed insurmountable. The system our forefathers designed was brilliant, even genius. Because of their brilliance, we will continue to succeed over the long haul while trying to benefit as many people as possible.
As always, we advise sticking with your plan. We are here if you want to discuss anything, so please feel free to call anytime, or email us if you want to schedule time to go over your portfolio.
Sincerely,
The Westhill Investment Committee
Lead Editor, Nico Safrit