In September, investment performance was positive. US large cap stocks fared the best, followed by international stocks, bonds, and US small cap. So far this year, all four the indexes we track have positive returns.

Past Election Cycles
Up to this point, it’s been a fantastic year for investors – both bonds and stocks have done well. As we look forward to the final quarter of the year, there is an obvious catalyst for volatility in the markets – the presidential and congressional elections.
Similar to the past two election cycles, we have a presidential race that is too close to call. So perhaps those market environments can give context into what we might expect in the coming days. Here is a graph of the S&P 500 in 2016:

And here is what it looked like in 2020:

In both years, the market fell during the first quarter, then rallied during the spring and summer before falling again in October (shown circled in red). Also, in both cases, markets had a strong fourth quarter and ended the year higher. This strong performance doesn’t seem to correlate to the election results, with each party winning one of the elections while losing the other.
While 2024 could play out differently than 2016 and 2020, we want to remain open to the possibility of market volatility in the coming weeks. This is what we’ve seen over the last two election cycles, so it would not be surprising to see it again. But despite heightened emotion and increased rhetoric, from a historical perspective, political elections have not been sufficient reasons to make big changes to your investment plan. Instead, they tend to be short-term volatility events that fade over time.
If you would like to discuss how the election may affect your situation personally, let us know.