Early Post-Election Takeaways: Comparing 2024 to 2016

Chart of the Month
Written By Jonathan M. Elliott, CPWA®, CRPC®, CDFA®, ChSNC®, CPFA™, RMA®

Photo Credit: Ian Hutchinson, Unsplash

The election is over, and global markets analyze the outcome and adjust portfolios. Republicans are set to control the White House, Senate, and House. Still, the results are also notable for a historical reason: the president-elect, Donald Trump, is returning to office after a previous election loss—a rare political comeback not seen since Grover Cleveland in 1892. As a result, investors are looking to Trump’s first term as a roadmap for how this administration’s policies may impact markets.

The market’s initial reaction, modeled after the first Trump administration, is understandable. However, the Market and Economic Landscape chart shows the economic and financial landscape has changed since then. 2016, the US economy emerged from the 2015 industrial slowdown with sluggish manufacturing and weak growth. Today, the economy is quite different:

  • Growth is stronger

  • Unemployment is lower

  • Consumer spending is robust

  • The federal deficit is more significant

Additionally, the Federal Reserve is cutting interest rates rather than raising them, and the pandemic has reshaped the global economy. In the equity market, the S&P 500 returned +36% in the 12 months before this election, compared to only +2% before 2016. Stock market valuations are more expensive, interest rates are higher, and credit spreads are tighter.

The market appears to be in “copy-paste” mode, using Trump’s first term to guide investment decisions. However, investing is rarely that straightforward. The second Trump administration will impact markets, but fundamentals and economic data will continue to be the primary drivers. The key point: Trump 2.0 doesn’t necessarily imply Markets 2.0. The president is the same, but the economy and markets are different.

Post-Election Market Performance (11/5/2024 to 11/13/2024)

US Stock market price returns since election

Market and Economic Landscape: 2016 vs 2024

Market and Economic Landscape 2016 vs 2024
 

Important Disclosures
This material is provided for general and educational purposes only and is not investment advice. Your investments should correspond to your financial needs, goals, and risk tolerance. Please consult an investment professional before making any investment or financial decisions or purchasing any financial, securities, or investment-related service or product, including any investment product or service described in these materials.

Our Insights

Featured
Markets Cool After Last Week's Election-Fueled Rally
Markets Cool After Last Week's Election-Fueled Rally

This week, the stock market remained relatively flat following election-driven gains from the previous week. The S&P 500 posted a modest decline, while the Russell 2000 fell nearly 2%, a sharp contrast to its 8.6% surge last week. Remarks from Federal Reserve Chairman Jerome Powell sparked concerns that the central bank may take a more cautious approach to cutting short-term interest rates. Additional inflation data is expected before the Fed’s mid-December policy meeting.

Early Post-Election Takeaways: Comparing 2024 to 2016
Early Post-Election Takeaways: Comparing 2024 to 2016

The election is over, and global markets are analyzing the outcome and starting to adjust portfolios. Republicans are set to control the White House, Senate, and House. As a result, investors are looking to Trump’s first term as a roadmap for how this administration’s policies may impact markets.

Election Driven Rally Pushes US Equities Higher
Election Driven Rally Pushes US Equities Higher

Stocks traded higher this week, with most of the gains occurring after the election. The S&P 500 reached a new all-time high, nearing the key 6,000 level. The broader equity market rally was notable as investors priced in the Trump administration’s pro-growth, reflationary policies. The past few weeks have been packed with market-moving events, but the calendar is expected to settle down as we approach year-end.

Jonathan M. Elliott, CPWA®, CRPC®, CDFA®, ChSNC®, CPFA™, RMA®

I am currently the Managing Partner for our independent investment advisory firm, Optima Capital Management. Together with my business partners, Todd Bendell CFP® and Clinton Steinhoff, we founded Optima Capital in 2019 as a forward-thinking wealth management firm that serves as an investment fiduciary and family office for high-net-worth individuals and families. In addition to being the Chief Compliance Officer, my role at Optima Capital is portfolio management. I have over 18 years of experience in managing investment strategies and portfolios. I specialize in using fundamental and technical analysis to build custom portfolios that utilize individual equities, bonds, and exchange-traded funds (ETFs). I began my financial services career with Merrill Lynch in 2003. At Merrill, I served in the leadership roles of Market Sales Manager and Senior Resident Director for the Scottsdale West Valley Market in Arizona. On Wall Street Magazine recognized me as one of the Top 100 Branch Managers in 2017. I am originally from Saginaw, Michigan, and a marketing graduate from the W.P. Carey School of Business at Arizona State University. I am a Certified Private Wealth Advisor® professional. The CPWA® certification program is an advanced credential created specifically for wealth managers who work with high net worth clients, focusing on the life cycle of wealth: accumulation, preservation, and distribution. In addition, I hold the following designations - Chartered Retirement Planning Counselor (CRPC®), Certified Divorce Financial Analyst (CDFA®), Certified Plan Fiduciary Advisor (CPFA), and Retirement Management Advisor (RMA®). In the community, I am a member of the Central Arizona Estate Planning Council (CAEPC) and serve as an alumni advisor and mentor to student organizations at Arizona State University. My interests include traveling, outdoors, fitness, leadership, entrepreneurship, minimalism, and computer science.

Previous

Markets Cool After Last Week's Election-Fueled Rally
Next

Election Driven Rally Pushes US Equities Higher