Where Does the Market Go from Here with an Upcoming Election?

An article in today’s Wall Street Journal noted that studies have shown trying to predict the political outcomes of elections and their impacts on the stock market are ineffective. In a recent example, market pundits were completely wrong on the Brexit vote and its impact on British stocks. Closer to home, health-care stocks were panned by many analysts in prior years due to the passing of the Affordable Care Act. However, this sector has been one of the top performers of the S&P 500’s during the current bull market. 

Mixing politics and portfolios can be dangerous, because even if you correctly predict a political outcome, it does not mean that the market will react accordingly. Bottom line, it is best to have an investment strategy that meets your specific objectives and tune the rest out. 

It should be noted that even investment strategists are not the best barometer for where the market may be headed. According to the October 2, 2016 edition of Barron’s Magazine, the stock market finished higher last week, but Wall Street isn’t expecting more gains. FundStat’s Thoma Lee notes that the Street’s strategists have been lowering their targets for the S&P 500, and they currently see the index finishing the year right about where it is now. That, says Lee, is great news. When market prognosticators predict little or no gain, the S&P 500 has traded higher 12 months later 95% of the time, with an average gain of 11%. On the flip side, when strategists are at their most bullish, there’s about a 50% chance the market will fall. Says Lee, “Strategists tend to be an extremely reliable contrarian indicator.” 

As Warren Buffett famously said, “Be fearful when others are greedy and greedy when others are fearful.” Currently, I don’t believe either greedy or fearful are good adjectives describing the outlook for the market. Maybe subdued with a hint of optimism is best. 

The following is a link to a recent interview with two investment professionals whom believe the stock market is on a slow and steady ascent upwards for the time being. Please click on the link and see factors supporting their opinion: "Strategist Jim Paulsen: Gear up for the longest-lasting recovery ever."

The Number One Way Americans Waste Money 

The following is a link to a very insightful article at The Cheat Sheet, an online lifestyle resource. In the study referenced in this article, 2,000 people across the United States were surveyed about their financial waste. 

I recommend you click on the attached link and view the study and its results. I found it amazing as to what were the top causes of money waste per age group, and how individuals were not willing to adjust for them: "This is the Number One Way Americans Waste Their Money."

Quotes

“I don't want to waste anyone's time or money. I want to give people some truth and positive heart lift.”

Mos Def

“Take time for all things: great haste makes great waste.”

Benjamin Franklin

“Block out the noise and distractions of life, whether it be TV, Facebook, CNBC, the Internet, Twitter, etc. Most of what is thrown at us is negative and irrelevant, and in the end none of it adds any value to us individually or our loved ones.”

Tony Moeller

Quotes selected by the IAG staff

“A budget is telling your money where to go instead of wondering where it went.”

                   Dave Ramsey

“Beware of little expenses: a small leak can sink a great ship.”

                   Benjamin Franklin
 

Tony Moeller, CPA

The information listed in this commentary is a compilation of various publicly available sources and is for informational purposes only. It is not a recommendation or solicitation of any particular investment or strategy. A risk of loss is involved with investments in the stock and bond markets.

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