Jason Jacobi, CFP® (00:01.388)
Welcome to this week’s Closing Bell. It’s March 28th. It’s crazy. We’re almost through another week. It’s Good Friday tomorrow, celebrating the resurrection of Jesus, but Good Friday. Markets are closed, right Mark?
Mark Boyer (00:16.206)
Yeah, for sure. Friday, obviously, Jesus died on the cross and then Sunday’s here, baby. Easter risen from the dead. That’s what we’re celebrating this weekend. So good stuff, right? And yeah, markets are closed on Good Friday. We’ll be back on, open back on Monday and ready to roll. And the quarter’s over. It’s the end of the quarter. Today was the final…
Jason Jacobi, CFP® (00:37.74)
So we’re filming this on.
Mark Boyer (00:43.006)
training day of the first three months which have been really positive so it’s been good so looking forward to what happens in the next quarter here.
Jason Jacobi, CFP® (00:48.716)
Yes.
Absolutely. So our trading day is officially done at the time of filming here on Thursday afternoon. S &P 500 does what you just insinuated notches its best start to a year since 2019. So like you said, up over 10 % already, which is interesting because we talked about this last week. We expected mid single digit returns for the year. So are we on the, are we on the,
Mark Boyer (01:16.758)
Boom, we’re the end.
Jason Jacobi, CFP® (01:19.232)
Are we on the precipice of maybe a slight little down draft in the market from here or can we go up again? We hope we’re wrong. We hope it’s way better than it was than what we were predicting, but we could see a nice little correction here, huh?
Mark Boyer (01:34.19)
Yeah, so but traditionally so when you have runs like when you have a start like this, I mean they can Longer term continue. Yes. Do we need a pullback or some kind of sideways actions? Absolutely And we’ve been calling for that and think it’s gonna happen and you know, yeah, we keep going up in here. So it’s you know All said, you know, yes It should happen. But I think my concern with even that Jason is like
Everybody’s saying the same thing in regards to that every financial everything I will read every financial deal everybody’s like waiting for this pullback and when the pullbacks happen You know even in a day, you know, you get a down market and then boom buyers coming in You know just looking for somewhere and so Anyway, so yes, you know, it’s it’s overextended. I think there’s still great opportunities in stocks dividends payers for sure
But yet the growth stocks keep going up. So again, I think it’s back. I mean, it’s funny, like nobody, again, it comes back all the time to the fact that nobody knows. The experts, the smartest people in the world, and I’m not saying you’re not claiming to be, we’ve been having our opinions on that too. We all have an opinion on what it’s doing. And then it’s humbling because at some point, you’re not going to be right. And so it’s really…
Jason Jacobi, CFP® (02:49.29)
What?
Mark Boyer (03:01.774)
It’s quite a fun game. It’s a yeah. So that’s why I love it. It reminds me of sports and you could play a game on the flow and then you think everything like you can’t lose. And then all of a sudden, you know, you’re out of sync and a team that is just rolling all of a sudden isn’t. And everybody’s going like, what happened to them? You know, why? Well, you know, know, we’ve been at just kind of the same thing in markets. It’s really interesting.
Jason Jacobi, CFP® (03:19.562)
Yeah.
Jason Jacobi, CFP® (03:25.77)
Absolutely. So this week’s topic, we thought we’d kind of foreshadow election season coming up here. Primaries just ended. Fun fact, we’ve got over 4 .4 billion people around the world voting in their country’s elections. I think it’s over 76 elections around the world going on. Some have already taken place. You know, Taiwan elected a kind of a pro -independence president, which could kind of escalate or aggravate tensions with China, who obviously wants Taiwan back under.
their control, and then you’ve got the long term president over in that small country called Russia, Vladimir Putin, who won in a landslide, interestingly enough. So, you know, big surprise there. So, but the all, yeah, all eyes this year are going to be on our elections. So we thought we’d kind of break down.
Mark Boyer (04:10.35)
All right, guys, good.
in each one.
Jason Jacobi, CFP® (04:23.5)
some common mistakes that maybe some investors make, personal thoughts on what really is going to matter this year. So let’s dive into it. I’m going to use this PDF here by Capital Group as a guiding point, because I think there’s a lot of good information. Their Capital Group’s constantly voted on some of the top educational content out there year over year. So again, it’s very straightforward, very easy to talk through. But again, this is just going to help guide and aid our points.
that we just want to kind of bring across, right, Mark? So why don’t you talk a little, why don’t you talk about this a little bit, talk a little bit about political parties, right? People on both sides of the aisle talk about Republicans, Democrats are best for the market. Well, what does this, what does this show us here?
Mark Boyer (04:54.926)
Yeah, it’s okay.
Mark Boyer (05:08.846)
So, all right, dude, so this is kind of a this is a subject that gets me riled up because I’m pretty hardcore conservative but but you know, you look at longer term, you know, it really it as time is says and as it’s gone, you know, a lot of times, you know, whoever’s in the it really is an indifference interesting in different as it from as an from an investor standpoint, it’s really not a huge difference as to who
is in the majority as far as politically in the current year. You know, we get nervous about it. Right now, there’s a lot of angst about, you know, this upcoming election and so forth. And, you know, maybe more so than ever, possibly. So, you know, you said, well, it’s different now. It’s different. But it’s interesting to go back and look at history because this history often repeats itself. You can see here that, you know, that basically there’s there’s not been.
a huge difference between the two long -term depending on who’s in there. So, you know, this shows basically a hypothetical, you know, and our point is here is not to get into necessarily the politics, but as investors, it’s really important to see that, you know, through all the different, this graph is showing like a hypothetical thousand dollar investment invested back in 1933. You know, today would be, what is that, 10 million or?
Jason Jacobi, CFP® (06:35.436)
10 million, yeah.
Mark Boyer (06:35.79)
21 million by the end of 23. So that’s a huge increase. And you see the ups and downs through it all. And you see reds where Republicans are and like this middle ground. And I can’t, Martin, it’s on your sharing it. But you can see in every situation, you’ve had flat periods, down periods, and then up periods. So it really depends again, as investors,
The stock market depends on earnings, earnings per share and what particular companies are doing, how the economy is being affected. That’s really what the stock market is longer term focused on. Now, short term can be on political who’s here. You you get these certain situations. I remember when was it 2016 when Trump, you know, there was this, you know, Trump.
surprised everybody and won and the market just tanked and then all of a sudden they turned around and ran through the rest of the year and actually moved up. So you can have these short -term volatility issues with particular election results, but longer term it really hasn’t mattered a long time. So as investors, it’s really important in our opinion to stay invested.
Jason Jacobi, CFP® (07:51.5)
Absolutely. And we’ll talk about that in a second, but to go along with your point. So again, the chart showing Democrat and Republican presidencies got to look again, look macro, look bigger picture, earnings per share, you know, revenues of companies, but starts kind of at a more macro level, right? Like how the economy’s doing inflation numbers. I mean, obviously those numbers are going to impact the top and bottom lines of company profits and the consumer and basically, you know, who America votes for. Right? So I mean,
You’ve got, you know, every year there’s an interesting piece that we, what we saw talking about, you know, however the economy is kind of going in that presidential election year, you know, let’s say it’s doing really well, that bodes well for the incumbent and vice versa. If it’s, if the economy is not doing well or inflation sky high, or there’s cracks in the, in the ground per se, that might be a time for a change, right? We’ve seen that in elections past. So, but to your point, I like that point, just say it.
Looking at long -term like as investors, you don’t really look at who’s the president. That’s just one person. I love this saying, presidents get too much credit for when things are going good and too much blame for when things are going bad because again, there’s so much going on around them. Senate, house, majority, minority, gridlock. Is it a unified government? What’s inflation like? What’s…
you know, what’s the job situation like what’s, you know, what’s going on in the world geopolitically, like wars, there’s so much that that that that we can get into the weeds on here, and specific issues that do drive, you know, macro micro economic factors. But again, for the purposes of this podcast, and, you know, election years, let’s let’s let’s look at it through a different lens. Okay, so why don’t you talk about a little bit during
Election versus non -election years. This has been an atypical year, right Mark? In terms of how the market’s done so far this year?
Mark Boyer (09:57.382)
Yeah, I mean, we’ve had this, I mean, we’re again, we’re getting this run that we’ve had recently is all based on interest rates. It’s been since November, it’s been, that’s been the focus. And the fact is, when they started pausing on raising rates, and the economy seems to continue, the consumer seems strong, whether you whether it’s through, you know, credit cards or whatever, it’s just the fact is that the numbers have been stronger than expected. And so it’s a
You know, so we thought maybe interest rates were going to come down, but they’re kind of staying where they are for now. And there’s all that going on. But, you know, really the election, in my opinion, at the moment, hasn’t had any effect at all in the markets. Now, that doesn’t mean now going forward, you know, the second quarter, we just entered the first, second, third. Now we’re, we’re two primaries. We knew as far as president goes, you know, it’s Biden and or, you know, Trump. So it’s, you know, there’ll be some volatility in there based on.
Jason Jacobi, CFP® (10:39.786)
Mm -hmm.
Mark Boyer (10:52.472)
Again, some of the emotions that come around. Yeah, policy positioning, but yeah, it’s been really interesting. And this graph here shows, again, it’s just kind of the same thing that we saw before, whether you have election years in the bottom and versus non -election years. They both have moved, they tend to be volatile primary season, but markets have bounced back strongly.
Jason Jacobi, CFP® (10:54.092)
policy positioning. Yeah.
Mark Boyer (11:21.774)
usually after that. And so, you know, it’s, it’s, you know, again, it’s, it’s an interesting, yeah, we’ll see how it all plays out.
Jason Jacobi, CFP® (11:30.654)
Q3, Q4 usually responsible for the largest portion of earnings or growth of an index, especially the S &P 500 in an election year. So those are some really interesting points. And then even talking about sectors, right? Obviously, I think a lot of this is driven by policy. So for example, you look back at a specific president per se, it’s really interesting to see that like a range of one year returns. If you broke down the S &P by sector,
One year before an election, one year after, the one year after is quite interesting. You look at energy, energy’s done really well one year post -election cycle. Anything that we should be looking out for, maybe talk about specific opportunities maybe that would pop up throughout the year. We’ve had an incredible AI run, maybe value makes a play with inflation’s here to stay.
Well, that kind of rhymed. That was nice. But talk about that a little bit.
Mark Boyer (12:33.106)
Yeah, I mean, I think there’s always opportunities in the fact that I think in election years, the volatility actually can create those buying opportunities, right? You got, you know, depending on, you know, who looks to be ahead, you know, health care, for example, you know, there’s a lot of there’s a lot of ideas and differences between the conservative and Democratic Party in regards to how health care, the funding of it all that.
you know, whether it’s vaccinations, all these types of things, energy is another place, right? I mean, you got, you got one, you know, Trump is drill, baby drill, baby, you know, comes in, he’s going to open it back up like he did, you know, in the first term, you know, Biden’s like, no, no, no, we’re going electric, you know, we’re going electric, no matter what. And so, you know, that could be that, you know, EV space, you know, depending on how that goes, you know, that could be an area that you could provide.
Jason Jacobi, CFP® (13:17.164)
No matter what, yeah.
Mark Boyer (13:28.558)
a lot of volatility and energy, those two kind of bind each other possibly in this election year. So I think it gives opportunities in either one of them. I don’t know in tech, there’s certain areas that are just so like AI, it’s hard to say. I’m not really sure either party really is dependent on how that one works, because that’s just like, that’s full go live, heading in, semiconductors, all that.
Jason Jacobi, CFP® (13:48.46)
Yeah.
Jason Jacobi, CFP® (13:56.682)
Yeah.
Mark Boyer (13:57.742)
Right. I don’t know. Yeah. But other ones definitely have, you know, yeah, definitely can be a different, you know, opportunities to invest. So again, long term, that’s why we, you know, we, we choose really good managers and people that we trust and have been doing this a long time to find those opportunities when they come. So that’s why it’s really important to stay invested even through it all.
Jason Jacobi, CFP® (14:05.644)
opportunities.
Jason Jacobi, CFP® (14:21.996)
points. So let’s talk about mistakes investors make because there are a few that everyone, even ourselves included, right? When you’re managing your own money, there’s something about it that makes you second guess what’s smart to what you’re feeling at the moment, like your gut. Let’s talk about how the funds flow during election years, not during election years. It seems like
there tends to be a kind of a flight to safety as we come up to an election year, right? Where, you know, money market funds tend to raise, which this chart shows here, right, Mark? I mean, we’re already there. I think just with the economy, you’ve seen almost $6 trillion, right? That’s sitting in cash money market funds right now. So I think we’re there. We saw that in the year three, kind of proof in the pudding right here. But what’s the negative of investors staying too long in
money market and potentially missing the potential upward trajectory of the market post election being decided.
Mark Boyer (15:31.598)
Well, yeah, I mean, a great question. And you sort of just answered it. That’s that’s it. I mean, the fact is, is that typically when our emotions get involved and when we when we are strong on a subject, especially in regards to politics or whatever. And again, I saw I’ve seen this over and over again in election years and and then the year after an election, especially, you know, where certain, you know,
Either side of the aisle, people that lean one way or the other have a tendency to be really concerned once the other party wins. I saw this after the 20, when Biden won this last time, it was very interesting to have some people were just like, oh my gosh, we’re going to go, everything is going to, this guy is going to crush us.
you know, in certain areas, yeah, but then the market’s done really well. And so those same people have really, you know, because of maybe, you know, being really conservative and putting money away somewhere else and kind of hiding it until they feel more comfortable. Usually you don’t feel comfortable until the markets moved tremendously back to the upside. And so you’ve missed you’ve missed real opportunities when the markets are down and so forth. So
Jason Jacobi, CFP® (16:49.42)
Hmm.
Jason Jacobi, CFP® (16:52.906)
Yeah.
Mark Boyer (16:57.678)
You know, there’s study after study. This is our emotion when our emotions are involved in this type of especially, you know, this this is a big emotional area. It really can hurt you long -term because any any time your your biggest whether you know saw it actually in 20, you know 2022 when the markets drop, you know, everybody’s panicking They’re starting to you know, you get this big washout finally. We’re just I can’t take it anymore I got to get out and usually that’s you know, that’s where the smart investors are actually getting in so I
Jason Jacobi, CFP® (17:17.42)
Yeah.
Mark Boyer (17:27.31)
The key is, again, to have a diversified portfolio, in my opinion, to where you don’t have to panic out of anything or get so round up. Just stick with your guns. Whether you’re a conservative investor or more aggressive, stick with what you want to do, but stay invested because there’s always something that’s going to be in an upcycle.
Jason Jacobi, CFP® (17:51.756)
Time in the market beats timing the market every time. So that’s a great point. And then again, just going back to your initial point. So let’s say you’re, you know, whether you’re a conservative or a Democrat that, you before Trump, you know, when you find out that Trump won or even before that, you’re already in money market, you know, and Trump wins and the market, I think tumbled about 1 ,100 points that next day. And then,
It was basically straight up from there for four years. I mean, we had really strong returns year over year in the S &P 500 and all the major indexes. So just saying that you could have missed out on a large portion, depending on when you got back in, of returns because of your personal feelings and emotions on something. And then vice versa. You did going back great financial crisis, 08, 09, Obama comes in office. Maybe some people were already heavily in cash.
Just because of everything that was going on in the economy, right? Not knowing what was going to happen. That was basically that period following that was basically the greatest bull market we’ve ever had in terms of stock market performance. So it’s, it’s to your point of focus on your goals, focus on the longterm and don’t try to play into emotion. It’s hard to do. It’s, it’s easy to say and hard to do, right? That’s why a lot of people do.
Mark Boyer (19:14.382)
Yeah, that’s why. Yes, it’s a killer. It just crushes performance when we get too emotional about things. So I’ve seen it over and over again. And I’ve made the mistake at times to do it. So just, you know, I think again, and not specifically to elections, but just markets and so forth. You know, usually the average investor normally does the wrong thing at the wrong time.
based on emotional, you’ll make the wrong decision at the wrong time. Something that you should have done months ago if you’re really that concerned or thought I was, you now you panic out at the bottom or, you know, that’s kind of the concern now in a sense of, and again, we’re not talking about why you want to see the market at such it’s gone up so much. I start getting nervous when all of a sudden everybody who’s typically been really conservative in their investing all of a sudden like, hey,
I want to get more aggressive as the market keeps going up. And I’m like, oh boy, you know, and I’ve seen that in market tops or, you know, those euphoria fear of missing out to where you jump in. So have a plan and keep with it. That would be always the suggestion.
Jason Jacobi, CFP® (20:12.396)
Yeah.
Jason Jacobi, CFP® (20:29.196)
Great advice. You’re always so wise, Mark. But last thing I want to touch on before I let you go here is as Boyer Financial’s outlook, again, this isn’t meant to be polarizing, but in my opinion, so I’ll start just by saying, so what are the markets going to do, dependent on, I guess the question would be, how would the markets act in a more favorable way?
So what would be the best, most advantageous avenue and route for the market to go up? What would make the market go up? A Biden presidency or a Trump presidency? In my opinion, just looking at the policy differentials, I think the markets would favor a Trump presidency just because he is more pro -business, pro -growth oriented policy president.
Um, where Biden has wanted to increase corporate taxes, increase personal taxes. Um, and again, and then you’ve got on top of that, both sides of the aisle spending exorbitant amounts of money right now. Right. So like, what’s going to help us kind of get out of that. And I think the kind of the more optimistic, pragmatic approach to cutting red tape, growing, uh, you know, GDP growth, increasing and kind of releasing the hounds per se in terms of.
allowing America to be the hub of growth and ingenuity that it has been, right? Whoever can offer that, I think that’s going to kind of drive corporate profits, wages, and ultimately market growth over the long term.
Mark Boyer (22:10.272)
Yeah, I mean, all true. And, you know, I would agree with that for the most part. I think, you know, anybody who’s pro -business really gets rid of regulation, you know, really gives the entrepreneurs of this country, you know, reduces taxes, reduces the, you know, kind of the idea of, you know, not trying to control them, you know, the, you know,
you know, price, the earnings, you know, supply and demand, you know, you know, supplying people, giving them a chance to actually get out and produce more products and services without much regulation. I think anytime you have the weight of the government on the economy, it’s a negative thing. So at the current time, it feels like from, you know, from, you know, it feels heavier even now with, you know, a lot of things that Biden’s been doing, a lot of, you know,
It just feels like it’s heavier and heavier. You know, here in California, you know, you see, you know, Gavin Newsom and they, you know, they’ve raised the minimum wage up to 20 bucks an hour, which always sounds great. I mean, yeah, because people, we want people to make more money. But, you know, when you have a, when you have a company, uh, and you’re now, you have to pay people 20 bucks an hour that you were paying 16 or whatever for that, you know, it’s not, that money just doesn’t come out of nowhere. It actually gets passed on to.
Jason Jacobi, CFP® (23:34.06)
past.
Mark Boyer (23:35.054)
Yeah, so when you have government getting involved in these things and creating like this, you know, just all these regulations, it really causes problems and creates problems. So I think right now it seems to be, you know, that seems to be the problem. And so that’s probably why, you know, you’re thinking and I agree, you know, I like to have somebody in there who is more, you know, from the president through all the way down, you know, the ballot.
to locally, I want to see people that are more allowing companies to actually go out and let the economy run, let it go, reduce the regulation and let us make things happen. Because once that happens, history shows, as much as you want to try to debate it, the history shows that if you lower those regulators, give companies a chance to make profits and grow it, grow their businesses, it creates jobs.
And in fact, everybody’s income becomes comes up, right? All these different things, you know, are increasing. So, yeah, that’s that’s part of that. I think that’s I think you’re right on that. And that’s going to be it’s going to be interesting to see what happens again. Back to our, you know, longer term. It may or may not matter who’s in that situation. But I think long term for this country, I guess what I’m worried about is it feels like so much more government control, almost like this.
Jason Jacobi, CFP® (24:37.9)
Mm -hmm.
Mark Boyer (25:01.694)
socialists like, hey, you can only say these things or blah, blah, blah. There’s a lot, you know, feel like our freedoms are getting taken away. I think that’s a really concern. It’s probably gonna be a big part of the, obviously, it’s gonna be a big part of the elections this year.
Jason Jacobi, CFP® (25:15.468)
Yeah, I definitely think that we’re in an era of government capitalism where basically it’s been an artificial injection of capital by the government, right? The spending, you know, through their tax money, through bonds, treasuries being issued, bills, notes, and bonds, you know, and then just trying to keep up with interest payments and keeping the government open. We’ve seen a few shutdowns averted already.
over the past few years especially. But again, I think the main thing about that is like all of that money injected, the M2 money supply exponentially increasing post COVID, right? All that free money handed out and then having it sucked out like a vacuum this last year and a half, two years is going to start kind of playing its way through the system. And so I think the growth that you’ve seen, the GDP growth,
The spending that’s been so powerful has had a lot to do with government. So what you’re talking about, and it’s really interesting. And the more people can see that and say, hey, like maybe what do you think is going to happen if we have a strong economy and the Fed starts cutting rates like they did in the 70s? Isn’t that going to make inflation worse? Because people are going to be spending money again? Because then if you’ve got a strong economy that’s still humming along and you’re cutting rates, that’s basically easier to borrow money, easier to spend money.
could spell a little bit more of a difficult prolonged period of kind of interest rate sensitivity, especially for the bond market.
Mark Boyer (26:49.998)
Yes, possible. I mean, that’s what, you know, there’s a lot of similarities between now and in the seventies. And I think the Fed’s trying to, you know, keep an eye. They know that too. And they’re being judged against that. But, you know, the fact is, you know, so like big government, you know, government wants to continue to grow. I think that’s our biggest adversary at the moment in our country is the size of our government. No doubt about it. And so.
Jason Jacobi, CFP® (27:14.892)
greed. Big governments don’t work.
Mark Boyer (27:18.382)
I want leadership that understands that and reduces that piece and allows the free people of America to continue to be free and also to eliminate the barriers that are causing us to not be able to really grow our businesses, our families, the way we want to. That’s what this country has been built on. And that’s what we need to continue to be. And so that’s what I’m all about. So it’s…
Jason Jacobi, CFP® (27:41.196)
Mm -hmm. Yep. Yeah.
Mark Boyer (27:47.886)
I think that’s really, really important. Get the government out of our lives. And again, we need regulations. It’s not saying you get rid of everything, it’s all free. The point is, give me an incentive to go get something done. I’m free to go try to make a company, build something, take care of my family, blah, blah. I’ll go out and work my house. I’ll go work my tail off to do that, right?
Jason Jacobi, CFP® (28:10.124)
buy a house, yeah.
Mark Boyer (28:15.534)
But if I don’t have that incentive to go do it, whether I work hard or not, I still get the same pay or whatever. That’s no incentive. There’s no greatness in that. I want to bring out the greatness. I want to see the greatness of the American people come out again. It just feels like that’s not happening right now for the most part. But we’ll see. Hopefully, we’ll have some.
Jason Jacobi, CFP® (28:26.732)
Yeah.
Jason Jacobi, CFP® (28:38.028)
Great. I appreciate the candor, but that’s all we have for you this week on the presidential election cycle. What it means for you as an investor. Stay the course. Time in the market beats timing the market. And just stick with your goals. If you have any questions, you can always reach out to us. But until next week, have a happy Easter. We’ll see you next one.
Mark Boyer (29:00.322)
Happy Easter.
