The Change-up 11.11.2024: The Election Reaction

Happy Monday! And Happy Veteran's Day. Thank you to all who have served to protect our great nation. I am so very grateful for your service.

I hope you enjoy this edition of The Change-up, my weekly newsletter sharing the latest market news and personal finance tips. If you're interested in learning more about working with me, click my Calendly link at the bottom.

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Quote of the Week

“In the beginning of a change, the patriot is a scarce man, and brave, and hated and scorned. When his cause succeeds, the timid join him, for then it costs nothing to be a patriot." - Mark Twain

Song of the Week

The Story

This is the first time I can remember seeing all indices up over 4% since I started this newsletter. Markets exploded on Wednesday after it became clear Donald Trump would win the 2024 Presidential Election. Small-cap stocks especially took off, with the Nasdaq 2000 up over 5% (up over 6% for the week!). The biggest loser was bonds, with rates rising on the news. Oh, and the Fed cut interest rates by 0.25%. There is now a 65% chance of one more rate cut in 2024. 

My View

Thankfully, my phone can now stop buzzing from campaign donation requests. 

Donald Trump will be America's 47th President, becoming the first Republican nominee to win the popular vote in over 20 years. The GOP also will control the Senate and is on track to hold a majority in the House as well. This will give Republicans a clear pathway to pass legislation without bipartisan negotiation. 

So, what could it mean for your money?

Raymond James Chief Investment Officer, Larry Adam, had some thoughtout points on the subject: 

1. Tariffs

Trump made the promise of tariffs a key part of his 2024 agenda. He can impose tariffs through executive order. While this could theoretically make goods more expensive, the lower cost of energy through increased U.S. production and a strong U.S. dollar could help to offset some of the costs.

2. Less Regulation

The Biden administration placed increased regulations on public companies. Trump will roll that back, with financials, healthcare and energy being the biggest beneficiaries. Financials were a big winner on Wednesday. 

3. Taxes

The 2017 tax cuts will most likely be extended. This means the continuation of the higher estate tax threshold and standard deduction. 

But what about the stock market?

As I've discussed before, the President has historically had little to do with market performance. Republicans usually lean more corporate-friendly, but the market is ultimately driven by earnings. 

If companies can keep margins high and make money for their shareholders, positivity in the market will continue. If not, we could see a pullback.

My stance on owning stocks, bonds, or even real estate remains the same today as it did last Monday. And the Monday before that, and the Monday before that.

Buy quality assets and hold them for the long term. There will be bumps along the way, but you'll be better off than trying to time up the market. 

This Week

• Veterans Day (Bond Market Closed)
• October's CPI & PPI (Wednesday & Thursday)

I talk a lot about tax-loss harvesting, which involves selling investments that have an unrealized loss to offset capital gains or a bit of regular income. 

But sometimes, we intentionally harvest gains!

Here's an example.

A client had a down income year. Their income is going to be essentially $0 for 2024. This presents a huge planning opportunity, as the capital gains tax rate is 0% for income under $47,000 (single filer). 

Because the market has been so strong the past few years, we can realize over $40k in capital gains paying $0 in taxes. And unlike realizing capital losses, we're able to buy the security back instantly, stepping up the cost basis on the investments!

There are planning opportunities everywhere if you look around and take advantage of them.

Let's have a great week!

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