Portfolios Don't Care Who's President

DANO WEIR: The show's gonna start.

DANO WEIR: But Darren, you know that like ASMR thing that people talk about on the internet where you talk really quietly? It draws a lot of attention. I don't know what that is, Dan. Okay, but people do this thing where they talk really, really quiet.

DAREN BLONSKI CFP®: Like they have something really important to say.

DANO WEIR: Yeah, and I do have something important to tell you. Okay. But I don't want to draw a lot of attention because this episode, we're gonna talk about the election.

Welcome to It's All Money. Hosts are right here in front of you.

We're taking out It's All Money.

DANO WEIR: Hey, welcome inside the Sonoma Wealth Conference Room just off the Sonoma Square on It's All Money, our podcast about money. I'm joined by Darren Blonsky, CFP, AIF, other designations.

DAREN BLONSKI CFP®: ABC, abacadabra.

DANO WEIR: Absolutely. I'm Dan O'Weir. I'm the marketing director for Cine Wealth and the host of the show. And Darren, we are going to talk about the election today.

DAREN BLONSKI CFP®: That's brave of us, Dan O'. That is very brave of us. But there's a lot to say. But it's also a delicate...

DAREN BLONSKI CFP®: Discussion because there's a whole lot of people who are really upset because this is only two days after the election when we're talking about this a whole lot of people that were really upset i think is it two or is it three already it's Friday November 8th 2024 as we record this so it's three and as we often do with many of our episodes not only do we say this is for educational purposes only but.

DANO WEIR: In particular today you Darren's right. There's a lot of people who are feeling a certain way, one way or the other, as a result of the election. And today we are going to look at how this might affect your portfolio and the economy only.

DANO WEIR: There are other implications for who is or isn't elected president. There's a lot of social implications. There's geopolitical implications. But for the purposes of this episode, we decided we wanted to look at how this might affect the market.

DAREN BLONSKI CFP®: That's right. The market and or your portfolio. And. Regardless of your politics, how do you look at this from an investment standpoint? So we want to frame it correctly here.

DANO WEIR: That is something that happens. You've been a financial advisor for a long time. You've been through a number of elections. I have. Clients probably come to you in the heat of the moment, in the pre or post election, and say, I want to do X.

DAREN BLONSKI CFP®: In fact, Tuesday night, I got... Quite a few emails of people starting to show anxiety for how the election was turning out.

DAREN BLONSKI CFP®: And the spoiler alert is we just don't know and we're going to show you all the evidence of that and it's best to do nothing. That's not advice but it's best to sit tight.

DANO WEIR: So the title of today's episode is Portfolios Don't Care Who's President. We'll start with a study from CNBC via the Financial Services Group In Power. That they did before the election showing that 50% of Americans believe the result of the 2024 election will directly affect their personal finances.

DANO WEIR: They also said that 99% of those people in that survey, excuse me, 99% of people in a Gallup survey said the economy was at least somewhat important in influencing their vote for the next president.

DANO WEIR: So I start the show with that to say, there is an impression that the president And their decisions has a massive effect on what's going to happen to the market and the economy. But as we'll show today, maybe not true, maybe not in the way that you think.

DAREN BLONSKI CFP®: Well, and I think the thing is, too, is it will even show this evidence that is maybe not the way you think. And we'll show that it usually doesn't matter as much who the president is. There's always this, I guess, there's always this desire to say this time is different. Right. And we might argue this time might be a little different, but the reality is most of the time it's not.

DANO WEIR: So if you're freaking out about your investments, you're freaking out about your portfolio, that's who today is for. Yeah. Yeah.

DAREN BLONSKI CFP®: Right. It's both sides. Like it's.

DANO WEIR: Let's say a couple of those. So what are some of the common misconceptions? I would say misconceptions. What are the some of the common. Conclusions that people are drawing as a result of Trump winning the election. I would say that Bitcoin is going to do really well, that all electric car makers are going to do really bad, and that big tech is going to do really bad.

DAREN BLONSKI CFP®: You could also throw in there with the rfk stuff going on that all these pro-arma is going to go through the through the floor that's right and that kellogg has to redo all their cereals and get all the dyes out of it like so that's going to have an impact and it very well might like what's true about this new what appears to be this new group of people coming in because Trump's old but a lot of the people he's bringing under him because if you look at his first presidency he brought in a lot of what we call the neocons and the neocons these extremely conservative very politically opinionated group of people that quote unquote deep stated the world.

DAREN BLONSKI CFP®: Right. And this time he's bringing in a lot of the tech bros. And that's, I think that remains the big question, at least in my head, will this time be different because they might actually do something this time? I don't know. I lean more towards though. They're not going to do much, right?

DAREN BLONSKI CFP®: Like what happens is, yeah, sure. The Republicans won the executive branch. They won the Senate and the House and they've got. The Supreme Court. But at some point, like those groups start interfighting, right? So they think, oh, we're gonna get all this done.

DANO WEIR: You're not conservative enough.

DAREN BLONSKI CFP®: Right. Again, you start having people peel off the other party, which then slows down the legislative process and slows down progress. Maybe. Maybe. We don't know, right? And now I do think that the Trump administration is going to hit it hard and fast this time because they've been through it once and they know the game.

DAREN BLONSKI CFP®: And they really only have a year and a half. Let's be real until we hit the next election cycle to get done whatever they want to get done. And if they go too far, the American people are going to put the brakes on them. That's why I'm always an advocate. We hope. We don't know. But I think it's fair to say that it's going to be more like it's been. Right? And we tend to see deviations from the center.

DANO WEIR: You're talking about economically?

DAREN BLONSKI CFP®: Economically. I think politically. I think we should expect more of the same of what we have. But maybe a slight deviation one way or the other. I don't think you're going to get this revolutionizing moment in America that they're professing at this moment. That would be the anomaly for that to happen.

DAREN BLONSKI CFP®: Making extreme decisions about your portfolio one way or the other is probably not a good idea, right? And in fact, if we look back in history, we see that like oil, for example, did better during the Biden administration because they constrained supply. Than in the Trump administration when they said, drill, baby, drill.

DANO WEIR: So it can be oil from a price standpoint on the market, right? Not necessarily gas prices.

DAREN BLONSKI CFP®: Correct.

DANO WEIR: Yeah.

DAREN BLONSKI CFP®: Correct.

DANO WEIR: Well, let's take a look at the S&P 500. We've got that here. This is for our podcast audience. We're in the conference room. We're looking at the screen now. And we've got a slide on the wall. And it is market performance by presidential party. This is the S&P 500, the CAGR, Darren. You know what that is?

DAREN BLONSKI CFP®: I think for sake of, yes, but I think for sake of the podcast, it's not worth the explanation.

DANO WEIR: It's the performance of the market?

DAREN BLONSKI CFP®: Right, more or less, but we would be getting way too far in the technicals to do the podcast. I think the way to just look at this is what's been the performance of the market and through the presence.

DANO WEIR: We've got a list of presidents from Eisenhower to Biden, and the list is, we're showing percentages of who's done well. In the market, how the market has done under that presidency. And for the most part, it's positive.

DAREN BLONSKI CFP®: Yeah, it's positive. And I think this is the thing that I think a lot of people miss with the president and with elections is, you know, Trump actually has a really hard job ahead of him because the market's done pretty well over the past few years, and it's pretty high. And if the market falls at all, that's going to show to him.

DAREN BLONSKI CFP®: But really, if we just look at the market goes in cycles, and it just so happens that it doesn't necessarily perfectly follow the presidential cycle, right? So if President Trump is going to inherit a really high market, he's got to keep that market going. And he's probably going to keep that market going through printing money. But guess what?

DAREN BLONSKI CFP®: Had Kamala won, the way she was going to keep that market going, printing money. So the 800-pound gorilla, quote-unquote, in the room, is who's going to print money. And they're both going to print money because none of them are dumb enough to stop printing money. Because the minute you stop printing money, guess what? Wheels come off the bus. This whole thing blows up.

DAREN BLONSKI CFP®: So they're both going to print, baby, print, right? Uncle Powell's just going to start printing that money. Right? It's rounded up. And that's going to push the markets, the economy, all of it up. None of them can stop. So both Kamala and Trump, they are populist presidents. Now they... Try to appeal to different sets of idealisms and values.

DAREN BLONSKI CFP®: And that's the difference. And we're not going to get into that in this episode. The point is they're both going to print and they both would have printed and they're both going to stimulate the economy and they're both going to keep pushing that market higher. And as you can see, it doesn't matter if they're Democrats or Republicans through history.

DAREN BLONSKI CFP®: So inflation and unemployment rate, you know what those are? Simple, right? Does it cost more to buy bread? And do you have a job? And can you get a job if you want a job, right? Government plays with these numbers all the time, messes with the statistics. I'm here to tell you that there, I guess I should say that carefully, but...

DAREN BLONSKI CFP®: The government shares information with us that's in its best interest to share with us when it shares it.

DANO WEIR: You mean like sharing jobs data and then coming back and saying like, ah, well, let's do a little edit on that. Yeah.

DAREN BLONSKI CFP®: Jobs data is a perfect example because jobs data is historically very noisy. Like, oh, jobs are way up. And then they'll come edit last job report and say, oh, yeah, by the way, it wasn't really up as high as I thought it was. And the so, yeah, I think that is. A good example. So what this is charts looking at is what's the inflation rate and the unemployment rate.

DAREN BLONSKI CFP®: And did it matter through the president, Democrat, Republican, and you can see, you look at that and you're just like, well, yeah, I mean, there's a little bit of difference, but. Nothing.

DANO WEIR: There's no market difference between the two policies. We're looking at a graph and we've got a 20% inflation and unemployment rate during the seventies, probably the gas crisis there. Right. And that's a Republican. That's that's Nixon probably. And then.

DAREN BLONSKI CFP®: And 78 there. So you had Carter. Those were, I think those are the Carter years when they, that's when we saw interest rates go up really high. And that's why he got kicked out of office.

DANO WEIR: And then as you said, as you have transfer power in 2016 between Obama and Trump, it's about flat. I mean, it's low, low unemployment, low. Low inflation.

DAREN BLONSKI CFP®: But it shoots up in 22 there probably because of inflation shooting up because the war is going on. We had all the COVID money printing. Yeah. But it's also looking at unemployment rate. And the unemployment rate has been really low.

DAREN BLONSKI CFP®: But the thing is, if you read under the data from the unemployment rate, what's been happening is the Biden administration was most of the employment coming out was coming from the government. It was fiscal stimulus. Right.

DAREN BLONSKI CFP®: Hiring lots of government workers and then unemployment stays low so government does do things to support its power and continue its power right in both parties both parties that's the point like it's like everyone's saying oh we're gonna all die because Republicans won or what we're gonna die because Democrats won it's just not the case and it's not what history's shown now does that mean tomorrow it's changed and we're gonna be different this time possible it's always possible but it's not probable.

DANO WEIR: According to this data set, and this is coming from visual capitalists, the average sum of unemployment and inflation rates with a Democratic president over the last 70 years is 9% versus 9.5% for Republicans. So about even there. I love this headline because I found this headline and I went, whoa, this is counter to what I've been researching.

DANO WEIR: There's a headline from Newsweek from late October, 2024. Investors make much more money when Democrats are in the White House. Research. This is from Newsweek and Charles Schwab. Research conducted by financial services company Charles Schwab detailed a hypothetical investment of $10,000 in the S&P 500 in 1948, which would have grown to $1.2 million by 2023 if only invested when Democrats controlled the House.

DANO WEIR: If they did it when Republicans controlled the White House. If they did it when Republicans controlled, the return would only be $312,000. So according to that, wow, you're going to get a lot more money if you were invested only during Democrats rather than being invested during Republicans.

DANO WEIR: However, if investors ignored the political affiliation of the president and continually invested throughout this time period, that $10,000 would be worth nearly $38 million in 2023. This $10,000 investment starting in 1948, only during Republican presidents.

DANO WEIR: As soon as a Democrat gets elected, you pull it out of the market, right? That $10,000 over that period is going to grow to $311,000. If you only did it during a Democratic presidency, it's going to grow to $1.2 million. And if you just stayed invested during the whole damn thing, it's $38 million. That right there sums up exactly what we're talking about.

DAREN BLONSKI CFP®: Pretty much. I mean, in just a perfect example of the garbage that is pumped at us from the quote unquote legacy media. And that's not a, hey, Trump thing. It's just a reality. Like, it's just not true. Right. But it gets pumped at us and we believe it. And then our clients come to us saying, well, I read this.

DAREN BLONSKI CFP®: And what should I do with my portfolio? And the reality is nothing. You should do nothing. You should stay the course and do exactly what we've been doing and just keep going and go back to the hobbies. Because you're not going to win by trying to play the political game. You just won't.

DANO WEIR: So I found some interesting data on, this is a survey of C-Suite executives, CFOs, CEOs of big companies. This is as of September, 2024, the PWC Pulse Survey. So they survey the CEOs and they say, hey, what do you think?

DANO WEIR: So here are what some of the top executives in the country think are going to happen, regardless of who had won. This was taken before the election, obviously. But regardless of who won, executives expect 61% of the executives surveyed expect a recession in the next six months. That's up from 49% in June 2024.

DANO WEIR: So executives, regardless of who wins, are expecting a recession, which is counter to what we've been told. I mean, on your, our other podcast on the markets, been saying soft landing, been saying this recession is done, we passed it, we're over it. Executives are still expecting it. Do you still expect it?

DAREN BLONSKI CFP®: I think the market's in a cycle. And it always has been in a cycle where I question the recession ideology or belief is until the government stops printing money, it's pretty hard to let anything happen. And so I think we have a term called liquidity, right? And liquidity just means how easy is it to get money from governments.

DAREN BLONSKI CFP®: Until liquidity slows down, it's hard. I just don't see it. I think that the politicians over the last 20 years have given carte blanche on printing and spending money. And until that spending stops, whether it's Republican or Democrats, it's going to be really hard to watch a recession kick in.

DANO WEIR: 77%. Of those executives expect an increase in executive orders and 75% expect more regulation and litigation.

DANO WEIR: And this one blew my mind. So all we think about is the president, right? All we think about when we think about the November elections, we just think president, president, president, president, president. There's a lot of other stuff on the ballot. And these executives surveyed when asked which government entities affect their company the most, more than half rank.

DANO WEIR: State governments and federal regulatory agencies in the top three. They were followed by local governments, Congress, all ahead of president. So president is the one, the premier position that everyone focuses on, thinks that this is the person who's the arbiter of the economy and the world. There's a lot of other factors that end up affecting business.

DANO WEIR: And this survey fleshes that out.

DAREN BLONSKI CFP®: Well, I mean, case in point, and I mean to say this very respectfully, but I think we could all agree upon the fact that over the last at least eight months, it's questionable about who's running this country, right? Because of President Biden's health issues. I think it's very clear having a father who passed away from Parkinson's and dementia, I watched that process happen and I see that process.

DAREN BLONSKI CFP®: The fact that the economy rolled on, the fact that we still operated just fine, tells you something about... How important and unimportant the president of the United States is. Yes, they're important, but there are a lot of other power bases in this country. And it's not just the president gets to do all. We don't have a dictatorship. Yet. Yet, but let's hope never, right?

DANO WEIR: Still two terms, right? We're still sticking at two?

DAREN BLONSKI CFP®: We'll see, right? Yeah, fingers crossed.

DANO WEIR: Finally, the CEO of BlackRock. Someone else who purportedly runs the world, depending on what Reddit forum you're in. Right. Larry Fink said.

DAREN BLONSKI CFP®: Careful, you might get delisted from YouTube.

DANO WEIR: She's just even saying that. Hey, don't say that. Don't say that. He said, I'm tired of hearing this is the biggest election in your lifetime. The reality is, over time, it doesn't matter. Wow. I mean, that's someone who's very much involved in the market. Someone said they are the market, and even he is not so concerned about it.

DAREN BLONSKI CFP®: Right, exactly. And I think just we have to remind ourselves that the world is bigger than any one person. And there are contrary, there are contrary parties that will keep power in check. And we can all hope that democracy continues. As the founder said, a democracy republic, if you can keep it.

DANO WEIR: So let's wrap up and let's before anyone takes the whole episode out of context. This episode was about the market and the economy. That's right. There are changes to come. There are things that will happen that will be disfavorable to some people, and people who are upset about the result of the election may see some of their greatest fears realized.

DANO WEIR: People who are excited about the election may see a few of those things happen. But the goal of the episode today was to share a little bit of history to show it doesn't always go exactly how you think.

DAREN BLONSKI CFP®: Yeah, absolutely. There's great measure to take a breath, step back and just know that. In fact, I'll tell this last story and we'll wrap it up. In my last college course in college, I took this class. I had to get these two credits at UC Davis. And the only class left was feminism between 1800 and 1900 in Latin America.

DAREN BLONSKI CFP®: I'm looking at this class to get these two credits, only one I take to just graduate and be done. I'm like, I got to take this class. I'm like, here I am. I'm like, I don't even speak Spanish. I don't know how I'm going to take this class, but I got to take it. It's the only one I take. So, but it was just a fascinating class and it studied how women impacted the world throughout history.

DAREN BLONSKI CFP®: And what we find is that when people try to break systems, the system will push them back into play. And that what's more powerful than any one individual is the system in which they exist in and live in. And so that women that tried to be revolutionaries and break the systems they were in were quashed by the systems.

DAREN BLONSKI CFP®: But women who tried to work within the system and influence the system as it was were very successful. And I think that's really true with any leader. The point is the system is more powerful than any one individual. And the way we create change is subtle influence inside the system. And keep that in mind that the markets are a system. They're probably the most dominant system in our world.

DAREN BLONSKI CFP®: And because they are a system, expect the system to do the system. And if anyone tries to break that system, then guess what? And fortunately, it's been up and to the right. That's the predominant pattern of the markets. So it doesn't do any good to bet with your money on the negative and that the world is falling apart.

DANO WEIR: If you're new to the show, this is your first time. Make sure you subscribe to the channel. We have many more episodes to check out. If this episode didn't really stick with you, watch it again. Maybe you'll get it the second time. Thanks so much for checking out It's All Money.

ANNOUNCER: This content was produced by Fermata Advisors, LLC, an SEC-registered investment advisor. DBA, Sonoma Wealth Advisors. The opinions expressed by Fermata Advisors, LLC on this show are their own. All statements and opinions expressed are based upon information considered reliable, although it should not be relied upon as such. Any statements or opinions are subject to change without notice.

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