How could these diametrically opposed groups that are influencing basically every aspect of public policy not cause the stock market to play favorites?

• When it comes to the stock market, though it historically doesn't really care one way or another what political party is in office. (03:33)
• What the stock market tends to be influenced by more than anything, though, is the certainty versus uncertainty factors that we've brought up a number of times. (05:07)
• But based on each individual administration's policies, and what they put into play can certainly affect how the stock market reacts to that news is, do they think this will increase the growth of companies? (07:02)

Quote for the episode: 'If you can say "I now know better what generally affects the stock market and what generally doesn't", then you have succeeded in the main takeaway from today.' (07:20)

Securities offered through TFS Securities, Inc., and Advisory Services through TFS Advisory Services, an SEC Registered Investment Advisor Member FINRA/SIPC. TFS Securities, Inc., is located at 437 Newman Springs Road, Lincroft, NJ 07738 (732) 758-9300.

Welcome to the Enjoy More 30s Family Finance

podcast. The only podcast dedicated to making life more

enjoyable for young families by hitting on the financial topics

that tend to weigh on us, stress us out, and distract our focus

from simply enjoying life.

Hello, and welcome to the next episode of this

Raising Your Investment Mindset series. This series we're really

trying to help you reframe how you may view the scary unknown

that is investments, and therefore be able to utilize

them in a more constructive way, better reach your goals, and

really just make life more enjoyable.

As always, if you like what you are hearing, please make sure to

subscribe, follow us on Apple podcast or really wherever you

listen. Clicking those stars, leaving the reviews, it really

helps us reach the literally millions of other young families

out there just like you.

Last week, we discussed how to many people wind up buying high

and selling low because of the role that those things called

emotions tend to play in our decision making, and the lack of

education that tends to be out there that's provided to us, the

lack of perspective on what's normal, so a 10% drop in the

market every 18 months on average actually is normal. So

if you haven't checked out that episode yet, definitely do that

soon.

Today's episode is titled The Stock Market Doesn't Care About

Political Parties, which may sound like it doesn't really

make much sense. You know, how could these seemingly

diametrically opposed groups that are influencing basically

basically every aspect of public policy not cause the stock

market to play favorites, right? The goal for today's episode

though, so the if you can say this at the end of the episode,

then you have succeeded statement is "I now know better

what generally affects the stock market and what generally

doesn't."

Gardening is something that I have taken up actually, in

recent years. I had tried it when I was young, I was terrible

at it, had very little success. And it wasn't until I was

exposed to my father in law's garden that my interest became,

you know, sparked again, and brings me to today. To me, I had

kind of always thought that the only thing that was needed when

it came to gardening was full sunlight and plenty of water and

anything should grow, right? I mean, in school when I was

growing up, and you learned about plants, that was the basic

gist even now when I watch Sesame Street with my kids, it's

what do plants need sunlight and water? And that's it, you see

the sun come out and the flowers, you know, they just pop

right up. What I learned, though, is that while those

things are, you know, important, they're not the most important

many times. Sure plants need water and sun, but a plant in

the wrong type of soil is going to struggle and most likely die

regardless of how much water and sun gets. If the soil is too

heavy or too loose, the roots aren't going to do well. If the

pH is off, the plant literally won't be able to get the

nutrients it needs out of the soil. That was like wild to me

how if the pH is incorrect, even if those nutrients may be there,

the plant won't be able to absorb them properly with an

incorrect pH. So the soil really is this all important element.

And if you think all the way back to learning about the, you

know, the fertile valley in history classes, it was that

good soil that was renowned. And I mean, many plants out there,

they don't even like full sunshine or lots of water. And

so after you learn it, you're like, "Oh, hey, yeah, that makes

a lot of sense."

So when we speak to clients around election time, they're

concerned about who is going to get elected in respect to the

stock market many times. And it feels like this is the

predominantly important water and sunshine. Concerned in

general, I totally get. You want the person who you think is best

running the country to be obviously going to win the

election. When it comes to the stock market, though it

historically doesn't really care one way or another what

political party is in office. And so since we have clients

that lean both ways, we tend to get about 50% of our clients

calling us during any one election. Studies have been done

on the President, the House, the Senate, and a combination of all

three of these things to try to see which is the most favorable

to the stock market. So maybe a Democratic president but split

Congress, maybe a Republican president and a democratic, you

know, Congress. All these different combinations. And what

they found after what I'm sure was a lot, a lot of work, a lot

of time is that there is no strong correlation for any

particular combination over the long term. So the most common

thought we have is "oh Republicans are supposed to be

good for business. So Republicans should mean a better

stock market." And statistically when they look back at it, that

is not true. There really is not anyone really strong correlation

that you can point to and say, Ah, ha, we want them to be in

office for the economy.

What the stock market tends to be influenced by more than

anything, though, is the certainty versus uncertainty

factors that we've brought up a number of times. It is a leading

indicator, which means it's acting now based on what it

thinks is going to happen in the future. If a company comes out

with a state of the art product, its stock would likely jump up,

not because it's actually sold any of those products and

actually made money off of those products but because the stock

market thinks it is going to make more money, thinks this is

going to happen in the future. Now, if the product winds up

blowing up, the stock will subsequently drop, because it's

saying they think this company is going to post really bad

earnings, but again, in the future. If you think back to the

last few significant events, you have COVID in 2020, you have the

financial crisis back in 2008. With COVID global pandemic, you

obviously had a ton of uncertainty on what was going to

happen. Once this started to get clarified, hey, here's the plan

of action, you saw things start to reverse course. And the

market actually ended significantly up by the end of

the year. In 2008, you saw major financial institutions like

Lehman Brothers going under, others in significant jeopardy

and so again, huge amounts of uncertainty. Once there was a

plan of action, bailouts, and otherwise, you know, you saw

this again, start to reverse course. So higher degrees of

perceived certainty, is that fertile soil?

So am I saying that government policy has no part in what

affects the stock market? No, of course not. The plants do still

need some water, they need some sunshine. And you know, even if

it may not be the most important factor per se, what political

parties may win or lose in general has historically, like

we said, not been something worth getting upset about. But

based on each individual administration's policies, and

what they put into play can certainly affect how the stock

market reacts to that news is, do they think this will increase

the growth of companies? Or do you do they think will be, you

know, a hindrance to the growth of companies?

As we get to the end of this episode, let's circle back

around to the goal statement. If you can say "I now know better

what generally affects the stock market and what generally

doesn't", then you have succeeded in the main takeaway

from today. Congratulations.

Thanks for tuning in today and join us for next week's episode

called Hollywood's Stock Market, where we're going to break down

how what you are shown in movies and TV creates a big part of the

basis for that uneasiness around investments today in my opinion.

Overall, if you're able to implement what we covered today,

as always fantastic. Bravo. You have less to worry about them

before and you can focus more on enjoying life. If you are

wanting help with these things, though, or have questions you

need help in clarifying, check out that Ask Joe section on the

show's website EnjoyMore30s.com. That's EnjoyMore30s.com. You can

also connect with me directly by visiting my wealth management

firm New Horizons Wealth Management at nhwmllc.com. Until

next week, thanks for joining me today and I look forward to

connecting with you again soon.

The conversations on this show are

Joe's opinions and provided for general information purposes

only. They do not constitute accounting, legal, tax, or other

professional advice for your specific situation. You should

always seek appropriate advice from a financial advisor,

accountant, lawyer, or other professional before acting upon

any content or information found here first. Joe is affiliated

with New Horizons Wealth Management LLC, a branch office

of TFS Securities, Inc., and TFS Advisory Services an SEC

Registered Investment Advisor Member FINRA/SIPC.