Many of us care deeply about which political party wins the presidential election but the stock market doesn’t. It mainly cares about corporate profits and over the past century, it hasn’t mattered who’s the president – profits grow. Presidents don’t have as much power as they would lead you to think they do because they have Congress to deal with and generally, their policies don’t impact the economy materially enough to impact corporate profits.
Market Trends, Taking Profits, and Rebalancing Your Portfolio
The awful stock and bond market in 2022 now seems like a distant memory with strong gains in 2023 and into the 2024 home stretch. Lofty inflation has plummeted, interest rates are falling, unemployment is near historic lows, consumers have the lowest level of debt in over 40 years, and the resilient US economy continues to grow moderately. But not everything has grown at the same rate. The best performing asset has been large U.S. technology stocks which have powered the S&P 500 higher than other areas of the stock market. Small and mid-sized U.S. stocks haven’t grown as much nor have international stocks; both these asset classes are now quite a bit cheaper than large US stocks, more so than in decades!
We review your portfolio regularly to see if trends like this have created an imbalance in your portfolio. If so, we take some profits from the high-flying areas and put the proceeds into areas that are less expensive and have more room to outperform. Rebalancing your portfolio gets you back in line with the risk you’re comfortable taking and it better positions your portfolio for stronger investment performance in the future.
All investing is subject to risk, including the possible loss of the money you invest. Past performance is no guarantee of future returns. Diversification does not ensure a profit or protect against a loss in a declining market. There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income. The performance of an index is not an exact representation of any particular investment, as you cannot invest directly in an index.
