Financial advisors are navigating the uncertainty of Biden’s impact on markets and the economy, scrambling to prepare portfolios and client expectations amidst a cloud of uncertainty regarding taxes and economic growth prospects.
Several advisors weighed in with Investment News, including our founder and chief investment officer, Zach Abraham. Zach summed up the unprecedented environment by saying, “The stock market is really confusing a lot of people right now.”
“There is unequivocally a massive separation between the performance of financial assets and the underlying economy,” he added. “The markets started celebrating after the election because one party didn’t sweep it, there wasn’t a blue wave, and there wasn’t a Trump reelection that would make the cities burn.”
But, going forward from here, Abraham said the financial markets are expecting mountains of government stimulus to carry the economy until it can get past the COVID-19 pandemic and back to standing on its own.
“It is structurally impossible for this economy to perform at the level of 2019 at any point in the near future and asset prices will reflect that new reality without stimulus,” he said. “It will take some bumpiness in markets to wake up the politicians, but those guys aren’t afraid of spending.”
While some advisers are trying to help clients navigate the unknown of higher taxes, others are wondering if clients are becoming too complacent with a stock market that continues to defy gravity.
From a pure stock market perspective, most data show that U.S. presidents typically get too much blame for down markets and too much credit for up markets.
An analysis compiled by John Bernstein, founder of Bernstein Financial Advisory, which measured stock market performance in two-year election cycles dating back to 1928, found that the political party in power was only responsible for about 2% of the stock market’s total performance.
Read the full story here: “Financial advisers navigate the uncertainty of Biden’s impact on markets, economy.”