Election week has wrapped up, and as always, the markets have made their voice heard. This week, we’re taking a politically balanced look at what’s unfolding post-election and what it means for investors on both sides of the aisle. The election results landed with a mix of reactions, but one thing is clear for investors: holding steady and not reacting hastily in the face of political outcomes has been a positive move for investors in the short run. Stock markets have hit new highs, rewarding those who stayed the course.

Now, while the country focuses on analyzing the broader outcomes, our focus remains on something more enduring: your personal financial goals. Politics may shift, but our approach to helping you achieve what matters most does not.

Interest Rates: Long-Term View

On the rate front, we’re seeing some important moves. Long-term interest rates shot up, while the Fed chose to cut rates on the shorter end of the interest rate curve. Currently, we don’t see a clear path to significantly lower rates on long-term bonds. For those extending duration and buying longer-term bonds, it’s worth doing so with a yield-focused, hold-to-maturity mindset. Rates may eventually trend lower, but we wouldn’t count on it just yet. For fixed-income investors, treasuries, high-quality corporates, and municipal bonds offer attractive income streams, which seem likely to stick around for a bit.

On the flip side, for borrowers, higher rates will demand an investment thesis that stands on its own merits rather than relying on cheap financing.

Equities: The Value of Diversification

As for equities, the broad market indices saw a lift, although not all sectors fared equally. International stocks took a hit, and certain sectors are likely to experience different effects depending on the policies in play. However, thanks to broad diversification, investors in index-based portfolios saw gains overall. “For the week, the Dow and S&P 500 both gained more than 4.6%. They had their best weeks of the year and their first positive weeks in the past three. The Nasdaq rose 5.7% for the week. The tech-heavy index’s weekly gain, while the strongest of the three, was only its best since September. For the week, consumer discretionary, energy, industrials, financials, and information technology were the top five sectors.[i]”

Still too close to call

It seems to us the market was less concerned with who won the election and more with a decisive result, which was achieved. We are very aware that Wall Street typically favors gridlock[ii] in Washington, but the final balance of power is still uncertain as House races remain close; We are watching closely.

With year-end on the horizon, we don’t anticipate major selloffs this year as most investors are opting to hold rather than incur tax consequences. This aligns with the overall sentiment in the market, which is encouraging to those holding diversified portfolios.

Staying Focused on the Long Term

It’s easy to get caught up in the market’s immediate reactions to election outcomes, but our guiding principle remains clear: stay focused on the long-term path. These events, while impactful, are moments in a broader, more nuanced journey. Let’s continue to work together on what matters most — your long-term financial well-being, regardless of political winds.

In this post-election period, enjoy the recent bump in your portfolio, stay focused on your goals, and remember: no single event or outcome should overshadow the long game.

Thank you for trusting us to keep you on track.

[i]https://www.cnbc.com/2024/11/10/the-2-things-that-will-drive-the-stock-market-after-last-weeks-trump-fed-rally.html

[ii] Gridlock refers to a situation in which different political parties control the White House and Congress, or when Congress itself is divided between parties. This division makes it challenging to pass new legislation, as opposing parties often block each other’s initiatives. For the stock market, gridlock can be favorable because it reduces the likelihood of sudden, sweeping policy changes that might disrupt economic conditions, creating a more predictable environment for investors.

Investment advisory services offered through Member's Wealth, LLC, a registered investment advisor. The Dow Jones Industrial Average (DJIA) is a stock market index of 30 prominent companies listed on stock exchanges in the United States. The S&P 500 index is designed to be a broad based unmanaged leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large cap universe or representative of the equity market in general. The National Association of Securities Dealers Automated Quotations (NASDAQ) is an American stock market that handles electronic securities trading around the world. The Russell 2000 index is an index measuring the performance of approximately 2,000 small-cap companies in the Russell 3000 Index, which is made up of 3,000 of the biggest U.S. stocks. The Russell 2000 serves as a benchmark for small-cap stocks in the United States. Visit www.russell.com/indexes/ for more information regarding Russell indices. The MSCI EAFE Index is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US & Canada. The MSCI Emerging Markets Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets. The Bloomberg US Aggregate Bond Index, is a broad base, market capitalization-weighted bond market index representing intermediate term investment grade bonds traded in the United States.

About the Author – Dane Czaplicki, CFA®

Dane Czaplicki is CEO of Members’ Wealth, a boutique wealth management firm that offers a comprehensive approach to serving individuals, families, business owners, and institutions. The firm’s goal is to preserve and grow its clients’ wealth to endure over time, while thoughtfully evolving its strategy to suit an ever-changing world. With over 20 years of wealth management experience, Dane and the Members' Wealth team thrive on bringing clarity and confidence to clients' unique situations. He believes everyone needs sound financial advice from someone whose interests are aligned with theirs, and is determined to put service before all else.

Dane received his MBA from The Wharton School of Business at the University of Pennsylvania and his bachelor’s degree from Bloomsburg University. Outside work, he enjoys spending time with his wife and kids, hiking and camping, reading, running, and playing with his dog. To learn more about Dane, connect with him on LinkedIn.

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