Artwork for podcast Enjoy More 30s: Family Finance
The Stock Market Doesn't Care About Political Parties | Series 7.3
Episode 321st March 2022 • Enjoy More 30s: Family Finance • Joseph P. Okaly
00:00:00 00:09:03

Share Episode

Shownotes

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.

Transcripts

Voiceover Audio:

Welcome to the Enjoy More 30s Family Finance

Voiceover Audio:

podcast. The only podcast dedicated to making life more

Voiceover Audio:

enjoyable for young families by hitting on the financial topics

Voiceover Audio:

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

Voiceover Audio:

from simply enjoying life.

Joseph Okaly:

Hello, and welcome to the next episode of this

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

that is investments, and therefore be able to utilize

Joseph Okaly:

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

Joseph Okaly:

really just make life more enjoyable.

Joseph Okaly:

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

Joseph Okaly:

subscribe, follow us on Apple podcast or really wherever you

Joseph Okaly:

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

Joseph Okaly:

helps us reach the literally millions of other young families

Joseph Okaly:

out there just like you.

Joseph Okaly:

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

Joseph Okaly:

and selling low because of the role that those things called

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

market every 18 months on average actually is normal. So

Joseph Okaly:

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

Joseph Okaly:

soon.

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

make much sense. You know, how could these seemingly

Joseph Okaly:

diametrically opposed groups that are influencing basically

Joseph Okaly:

basically every aspect of public policy not cause the stock

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

then you have succeeded statement is "I now know better

Joseph Okaly:

what generally affects the stock market and what generally

Joseph Okaly:

doesn't."

Joseph Okaly:

Gardening is something that I have taken up actually, in

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

a lot of sense."

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

predominantly important water and sunshine. Concerned in

Joseph Okaly:

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

Joseph Okaly:

running the country to be obviously going to win the

Joseph Okaly:

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

Joseph Okaly:

historically doesn't really care one way or another what

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

calling us during any one election. Studies have been done

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

Congress, maybe a Republican president and a democratic, you

Joseph Okaly:

know, Congress. All these different combinations. And what

Joseph Okaly:

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

Joseph Okaly:

of time is that there is no strong correlation for any

Joseph Okaly:

particular combination over the long term. So the most common

Joseph Okaly:

thought we have is "oh Republicans are supposed to be

Joseph Okaly:

good for business. So Republicans should mean a better

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

office for the economy.

Joseph Okaly:

What the stock market tends to be influenced by more than

Joseph Okaly:

anything, though, is the certainty versus uncertainty

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

actually made money off of those products but because the stock

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

saying they think this company is going to post really bad

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

obviously had a ton of uncertainty on what was going to

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

market actually ended significantly up by the end of

Joseph Okaly:

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

Joseph Okaly:

Lehman Brothers going under, others in significant jeopardy

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

perceived certainty, is that fertile soil?

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

parties may win or lose in general has historically, like

Joseph Okaly:

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

Joseph Okaly:

based on each individual administration's policies, and

Joseph Okaly:

what they put into play can certainly affect how the stock

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

know, a hindrance to the growth of companies?

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

what generally affects the stock market and what generally

Joseph Okaly:

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

Joseph Okaly:

from today. Congratulations.

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

basis for that uneasiness around investments today in my opinion.

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

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

Joseph Okaly:

also connect with me directly by visiting my wealth management

Joseph Okaly:

firm New Horizons Wealth Management at nhwmllc.com. Until

Joseph Okaly:

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

Joseph Okaly:

connecting with you again soon.

Voiceover Audio:

The conversations on this show are

Voiceover Audio:

Joe's opinions and provided for general information purposes

Voiceover Audio:

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

Voiceover Audio:

professional advice for your specific situation. You should

Voiceover Audio:

always seek appropriate advice from a financial advisor,

Voiceover Audio:

accountant, lawyer, or other professional before acting upon

Voiceover Audio:

any content or information found here first. Joe is affiliated

Voiceover Audio:

with New Horizons Wealth Management LLC, a branch office

Voiceover Audio:

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

Voiceover Audio:

Registered Investment Advisor Member FINRA/SIPC.

Links

Chapters