Big changes are coming to Washington — should you be worried?
By Let’s get this out of the way — my job is not to take a political position. I’m here to help you grow your family’s nest egg while doing my best to protect it from harm.
If you’re like me and my family, you’re going to have Democrats, Republicans, and the rest around your table this Thanksgiving. While many families avoid talking politics, the ramifications of the recent election will be on everybody’s mind. Over the last few weeks, our whole team has had conversations with clients and prospective families, and every one of them is concerned about the changes that may be coming with the new administration.
They’re wondering: What will those changes mean for the financial markets, our economy, and our future?
Ironically, I wrote this same time last year about how many folks were worried about the economy. Prices were coming down, inflation was falling, and the economy was humming, and yet consumer confidence was low.
Take a look at what I wrote then:
- “The Fed is winning the war on inflation.”
- “Corporate America is correcting.”
- “We’ll see a slight rise in unemployment.”
- “Now that the supply chain is fixed and energy costs are coming down, you could see earnings beats galore in the first, second, and third quarters of 2024.”
All of these things came true. This isn’t me bragging; these were common sense takes based on how the economy has always functioned. Now, as we roll into 2025, the new president is sworn in, and changes begin to be made, the puzzle is going to become more difficult. No one — not me, not the Fed, not Donald Trump, and certainly not Elon Musk — knows what will happen with changes in government appointees, immigration, rate cuts, and tariffs.
But I firmly believe that 2025 will be another solid year for the U.S. stock market. Corporate America is still very strong, and Americans are investing significant sums of money into our financial markets. Regardless of political leanings, there will be corporations that win and corporations that lose due to decreased regulation, changes in fixed pricing, and the impact of tariffs within their supply chain. If you think that our grocery prices aren’t going up when we apply tariffs to many of the countries that provide our produce and metals, you’re living in la-la land. But there have historically been periods when tariffs have helped America.
I think that small- and mid-cap American companies will benefit from tariffs imposed on our foreign trade partners and the Federal Reserve continuing to lower rates over time, reducing the borrowing cost on their corporate debt, which is used to finance their day-to-day operations. I could see a great reevaluation of smaller-cap companies that have been overlooked since the pandemic and have basically gone nowhere in five years.
I am excited for 2025 and the challenge it brings, and I’m excited for the opportunity that we have to serve you and all of our client families. Remember the great Warren Buffett quote: “Never bet against America.”
If you’re having anxiety about your financial future, come meet with us. We’d love to talk you through it and explore ways we can take some of that burden off your plate. We also encourage you to get to know us. Take a look at our annual Thanksgiving messages and get a sense of the people behind the planning.
You’re also invited to our Christmas party at the office on Dec. 5 from 4-7 p.m. I hope to see you there.
The information discussed is educational in nature and is not and should not be construed to be investment advice, nor a recommendation to purchase or sell any investment product or security. All investing involves risk, including the possible loss of principal, and there is no guarantee that any investment strategy will be successful. Past performance is no guarantee of future results.
Article by David Smyth, Senior Partner and Wealth Advisor at Family Financial Partners — a financial services firm in Lexington, Kentucky.