June 14, 2024
Article
As we near half way through 2024 already, investors seem to be breathing a collective sigh of relief for the reprieve from the market turmoil that plagued portfolios this time last year. Despite the US election standing ominously in the latter part of the year, markets seem to have defied tradition and provided a strong performance for the start of the year.
With the record-setting tussle (the record being the oldest Presidential candidates to run for office, officially beating the record that they themselves set in the last election) underway, world markets are waiting with bated breath for each candidate to set out policies on divisive issues. Top of the docket is the economy and cost of living in the US, with Americans tending to vote with their wallets; these will be key issues for the candidates. With markets at all-time highs and inflation falling, Biden’s post-Covid plans seem to be working. However, with Trump leading in the current polls, many investors are cautious about how the markets are set to shoulder the political landscape.
It should be noted that there may be some rocky seas ahead in the US equity markets this year. Whilst markets are normally slow out of the gate in election years, elections tend to cause volatility. However, regardless of the political outcome, returns commonly achieve non-election year levels by the end of the year, illustrating that the eventual ‘clarity’ is more important than the actual outcome for investors. This is effectively shown in the chart below outlining the average U.S. stock performance in election and non-election years between 1928-2023. As always, whilst short term market movements may scare some, it’s important to keep a long-term view to avoid missing the eventual market returns.
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