#39 – Impact of the Fed Rate Cut: What History Says Happens With Stocks, Bonds, and Cash Investments After Rate Cuts

Jeff Lloyd [00:00:04]:
Certified financial planner and chief investment strategist from Atlantis Capital Investment Advisors. Wes talks to you about investing and saving for the future. Good morning and welcome to money matters here, it’s Sunday morning. I’m your host, Wes Moss, along with Jeff Lloyd. We’re gonna be here until 10:00. Then Bulldog brunch. And I will say it is. I tuned into the station more this week than I think I’ve tuned in in a very long time.

Jeff Lloyd [00:00:32]:
All I wanted to hear about was the weather, when things would get shut down, how bad it was going to be, how many inches of rain. I wanted to hear Christina Edwards what she had to say. I even read a great blog from the great Kirk Mellish, who published on medium and talked about the unpredictability about these storms. Here we are on the kind of on, I guess, the other side of it. And, you know, it’s been a wet week, but we feel dry today. Jeff Lloyd, welcome to the studio. Thank you for having me back without your umbrella.

Wes Moss [00:01:06]:
A lot of rain this past week. Kids even got out of school. Yeah, because of the weather.

Jeff Lloyd [00:01:10]:
Ap’s was there. At least my AP’s school was out. They canceled early on Wednesday for Thursday, Friday. Talk about it. Rejoicing.

Wes Moss [00:01:22]:
I can appreciate that. They took command and just made a decision. It’s like, hey, we’re getting all this rain. Let’s just go ahead and cancel. You know, used to, when I was growing up, it’s like you watch the nightly news at like 10:00. Like, please, please cancel school. And you see your school.

Jeff Lloyd [00:01:39]:
Enough scrolling snow to fall over the night so that I will not have to go to school in the morning.

Wes Moss [00:01:45]:
Pray for snow.

Jeff Lloyd [00:01:46]:
And then as I got older, I realized that all the work just piles up anyway. So as I got older, I started to say, I don’t want anything to be canceled. It just means more. It’s more work. And then it snowballs.

Wes Moss [00:02:01]:
Just accumulates. That work. Just accumulates.

Jeff Lloyd [00:02:03]:
The work doesn’t go away. No accumulating work. I see where you’re going with that.

Wes Moss [00:02:07]:
Like snow and rain.

Jeff Lloyd [00:02:10]:
The snowball effect.

Wes Moss [00:02:11]:
The snowball effect. That’s right.

Jeff Lloyd [00:02:12]:
Jeff Lloyd is a man who lives in puns and pronouns and real life memes. You’re so good at that your grasp the english language is so good, you cannot help it.

Wes Moss [00:02:26]:
Sometimes I just can’t help it. I apologize in advance.

Jeff Lloyd [00:02:29]:
There’s so many places to go now. Let’s switch to the stock market. We are now over 40 new all time highs for the S and P 500. And that brings some concern for investors. Wait a minute, we’re at a high now.

Wes Moss [00:02:44]:
Now, do you ever get like calls or emails from families or clients that are like, hey, Wes, we are at an all time high. Like what should we do? Like should we sell now? It’s almost like a bad thing. They see markets are at an all time high. Well, I mean, take some chips off the tables. Do I sell? Like what do we do?

Jeff Lloyd [00:03:03]:
It is interesting because one, we want markets to do well. So it’s almost this dichotomous situation where things have done really well. Wait, I know we’ve done really well, but doesn’t, isn’t that bad now moving forward? Now I’m scared. Now I will say this, and yes, Jeff Floyd, and you’ve probably gotten this question too, a fair amount this year because I think the statistic is almost one out of every five days has been a new all time high.

Wes Moss [00:03:29]:
Yeah, this year. So think of, we’ve had 22%, 40 all time highs. Yeah, every five days.

Jeff Lloyd [00:03:36]:
I think we were joking on, I don’t know if it was Tuesday or Wednesday. I think it was Wednesday. The market was down and we were saying, wait a minute, the market’s only supposed to go up this year. What’s this red on the screen? But. Right. The statistics are pretty interesting. 22% of days this year. So more than one in five days.

Jeff Lloyd [00:03:57]:
The market has paved new ground. It lifted the ceiling yet again. And yet again. And yet again, over three dozen times so far this year. And there are a couple of thoughts and we’ve talked about all time highs in the past. A couple of months ago, we were talking about all time highs. I think we had 20 at the time. There were 20 all time highs and we started getting questions about it.

Jeff Lloyd [00:04:21]:
Then I think I didn’t get a question for a little while. And then now all of a sudden, all time highs. All time highs. And I have gotten the same question, what should we do? So number one, let’s go back and look at economic history and see what the markets did post hitting a high. We’ll revisit that. We also answer a listener who wanted to know about, we’ve talked a lot about the election and election years and does a Republican versus Democrat in the White House or Congress, what does that mean for any given year? But for some reason I haven’t read any, hadn’t read any data about what happens just post the election. We had a question from a listener that said, hey, well, in general, you heard you say that republican versus Democrats shouldn’t matter for any given market year. But what happens just after the election? How do markets do typically three months after any election? Well, any presidential election, how they do three months, six months, twelve months.

Jeff Lloyd [00:05:18]:
So I had not seen a study on that. So we just ran that. So, Jeff, Lloyd, you and our analytics team just went and did the numbers back to, I want to say, 1972. So we have 13, this will be the 14th in the cycle. That’s a pretty good data sets over 50 years, 13 different elections, and we’ll go over those numbers. But the question really goes back to where are we on the all time high? What happens with all time highs? So first of all, we’re getting close to being, we’re almost done the third quarter. We’re very close to being done third quarter number one. Number two, if you were to look at markets per quarter in general, on average, well, really, tomorrow is the last day of the quarter, the 30th.

Jeff Lloyd [00:06:02]:
Then we start October 1 on Tuesday. And historically, if you’re looking at the market by quarter, and you were to average all quarters together going back to 1928, Q one is ok, up on average on every q one. But on average, almost 100 year period of time, up a little less than 2%. Quarter two up about 2.3%. And then the quarter we are just wrapping up right now, it’s the worst quarter to be. It, on average, over the course of history, only up 1.3%. And quarter four, though, Jeff Floyd quarter.

Wes Moss [00:06:39]:
Four historically has been the strongest quarter of them all, averaging almost 3%. So 2.9%. So that’s, that should be welcome news for investors.

Jeff Lloyd [00:06:50]:
And I feel, and again, without looking at the year by year by year, there is that Santa Claus Christmas end of year effect.

Wes Moss [00:07:01]:
Yeah, the Santa Claus rally.

Jeff Lloyd [00:07:02]:
It feels as though that happens often. I’m very unsurprised when we get the Santa Claus rally, where you get some strength towards the end of the year and you get some strength in the beginning of the year. So that doesn’t overly surprise me. So what about, do we do presidential elections or all. Let’s do, let’s look all time highs. Let’s look at that data. So here we are at over 40 all time highs this year, plowing new ground levels on the S and P 500 that we have never seen in the course of history because they are new all time highs. It doesn’t count if the market’s down 15% and then just climbs back.

Jeff Lloyd [00:07:44]:
It didn’t climbs back. We don’t count a new all time high until it surpasses the old all time high. That could have been a very long period of time ago. And we have to, these are numbers that we have never seen. They’re new all time highs. And yes, we just hit more of them this past week. And sometimes it feels like you’re bumping your head on the ceiling and it may not feel like a great time to be invested or put new money to work because the market is literally at a high. And how many times have we heard maybe the most common platitude about investing of all time, which is, well, buy low, sell high, buy low, sell high.

Jeff Lloyd [00:08:23]:
So we face this psychological barrier when things have already done great. And it makes us wonder, hey, is it a good time to invest or keep investing? I think it’s natural to feel a little bit hesitant about putting new money to work when prices are at a peak. But the data is really interesting. The data shows that when it comes to how markets do post all time highs, they actually do very well. I guess there’s a couple of reasons behind that. But investing post after an all time high, it’s not nearly as bad as you might think. So what do market highs mean for investors? Well, first of all, like where we are today, it often means that some things are going right. So it means, hey, the economy’s got to usually be doing pretty well, number one.

Jeff Lloyd [00:09:18]:
And let’s check that box. An MRI or x ray of the economy is pretty complicated and there’s a lot to look at. But if you look at the totality of where we are, consumer spending and housing and interest rates and inflation and manufacturing and employment and earnings, on balance, pretty good. I don’t know if it’s not an a plus, but it’s certainly a b or b plus where we are. So the economy’s doing well. So that’s part of the reason we’re seeing all time highs. Secondly, that’s translating to corporate profits and corporate profits continue to grow. Now, the estimates for corporate profits have come down on how much growth we’re going to see, but we still have continued to see expansion.

Jeff Lloyd [00:09:59]:
So to some extent, you don’t get to an all time high unless things are going pretty well. So that, I think is important to note. And that’s where we find ourselves here as we enter almost in the fourth quarter of 2024, pretty solid economy and yes, a very good stock market that’s made lots of all time highs, but to some extent. Jeff Floyd, they come in clusters and it’s not uncommon. And we went back to, you went back to 1929, looked at the S and P 500 index, looked at it year by year by year. And then we essentially did account for how many times we hit all time highs within each year. Now it makes sense. There are a lot of years where there’s zero because we got a lot of years where the market didn’t do well or it’s just climbing back from a big drop.

Jeff Lloyd [00:10:51]:
So it doesn’t count as an all time high just because the market’s up. It has to surpass an old high. But if you go through some of these years, it’s not uncommon to have lots and lots of all time highs in any given year.

Wes Moss [00:11:04]:
Yeah. Just kind of looking at recent data. If you go back about ten years, starting in 2013, you had 45 new all time highs, 53 then ten, then 1862 and 20, 1762, 62 days that.

Jeff Lloyd [00:11:19]:
Were new all time new highs.

Wes Moss [00:11:20]:
New high next year, 19 next year, 36 2020 Covid stock market saw 33 new all time highs next year, 70. Now here’s where the data gets interesting. 2022, we saw one all time high.

Jeff Lloyd [00:11:38]:
Was that January 1 going down the rest of the year.

Wes Moss [00:11:43]:
And then last year we saw zero. We didn’t, we didn’t talk about all time highs on the show once last.

Jeff Lloyd [00:11:48]:
Year, really for two straight years. We didn’t talk about it because it didn’t happen. We had only one all time high within two solid full calendar years. Now here we are. And we’ve been, because we were coming back from a really rough period of time in 22 and some of 23 took a while to get back to where we were in order to continue to raise the roof and raise the ceiling of all time highs. So to some extent, we expect these to be in clusters. It’s not uncommon to have multiple all time highs. And then we’ll look at the data we’re going to run to quick weather traffic, but then we’ll look at the data between investing in an all time high relative to any other rolling period.

Jeff Lloyd [00:12:29]:
And those results. Interesting. Hopefully enough to stay tuned right here to WSB. You’re listening to money matters and more money matters here on a Sunday morning, straight ahead. Good morning, and welcome back to money matters here. It’s Sunday morning and we are examining the data, the historical data around what happens to the S and P 500, as we were calling that the market, once the market’s already done well. And it’s funny. Jeff Lloyd, you brought this.

Jeff Lloyd [00:13:25]:
We have not gone over this chart before, and we’ve talked to all time highs several months ago. And now we’ve made a whole another streak of all time highs. So we’re talking about it again. And I was surprised just during the break, looking through this chart. In my mind I was thinking of it one way and it’s the opposite of what I was thinking. And this is from JPMorgan Asset Management. JPMorgan always does such a great job with their data and how they show things visually. But this is a bar chart.

Jeff Lloyd [00:13:54]:
And imagine we’re trying to compare over a six month or in a one year and a two year and a three year period what it looks like if you’re investing on any given day, any given rolling period of time. So a one year period on average, a two year or three year period versus. So we’re going to stack that up against what if you only put your money to work at an all time high? So what would the result be over that course period of time? Intuitively you would think, well, if I, on any given period, let’s look at the three year number. At any given period of time, if I put my money to work, I would have x return. And we know over long periods of time markets tend to do well. So these are positive numbers. But intuitively I would think, well, if I put my money to work at the high point in a given market year, wouldn’t it usually be less than the normal three year period? And it’s the opposite of that. And that to some extent just shows the momentum that has to be going on already for the market to get to an all time high.

Jeff Lloyd [00:14:56]:
So the three year number here on average, this is from data from 1988 through the end of 2023, where any given three year period, these are rolling averages, was up 40.2%. Any given three year period, they call this investing on, quote, any day, on average, the full three year period cumulative of just north of 40%, but investing at new highs only during that period of time, on average up 48%. So it’s got to speak to just the momentum of, because we’re getting to an all time high, things usually are going pretty well. And to some extent, at least over the course of economic history, we’ve seen that continue so counterintuitively. Investing when markets are already doing well to some extent shows that it’s actually a promising thought for the next year, the next three years, the next five years.

Wes Moss [00:15:59]:
Well, it’s like we just talked about, well, Wes, I thought you buy low and you sell high. This data to me is buy low, buy high as well.

Jeff Lloyd [00:16:09]:
Buy low, buy high as well. I don’t think we could end it any better than that. How about the other statistic here? Maybe we’re going to have to wait till after news, weather, traffic. What happens when the Federal Reserve cuts interest rates right around an all time high? We’ve got a data going all the way back to 1980 on that as well. What markets do over the course of the next month, three months, six months, next year. Interesting. And what happens post an election? The s and P 500 on average over time? You are listening to money matters. I’m your host, Wes Moss, along with Jeff Lloyd.

Jeff Lloyd [00:16:44]:
News about the traffic that more money matters straight ahead. If you’ve ever done a Jane Fonda workout, or if you remember as a kid rocky running the steps, and if Michael Keaton is still mister mom to you, then guess what? It’s officially time to do some retirement planning. It’s Wes Moss from money matters. Weren’t those the good old days? Well, with a little bit of retirement planning, there are plenty of good days ahead. Schedule an appointment with our team today@yourwealth.com. dot. That’s your, yourwealth.com dot. It’s WSB’s money matters with Wes Moss, certified financial planner and chief investment strategist from Atlantis Capital Investment Advisors.

Jeff Lloyd [00:17:38]:
Wes talks to you about investing and saving for the future. Good morning and welcome back to money matters. Here it’s Sunday morning. Your host, Wes Moss, along with co host Jeff Lloyd. Welcome to the studio. It just feels nice that it’s, at least we’re through the deluge.

Wes Moss [00:17:53]:
Yeah. We didn’t have to boat or canoe into the studio. Rain had finally stopped, so I think.

Jeff Lloyd [00:17:59]:
The one small sliver about Thursday, Friday, even though we were mostly in a deluge, it was, the traffic was so light. Traffic was light. Nobody was out and about, and we were still, I was still driving around. And it’s kind of like on a holiday weekend when nobody’s here in Atlanta. It feels like you can actually get places quickly. Imagine this city would be truly Matt, this is a wonderful city. I’ve lived here for a couple decades now, and I’ve loved it, raised a family here. But just like most places, if you could just snap your fingers and make it so that a five mile drive takes five to seven minutes like it does when there’s a holiday, this would be a magical place.

Jeff Lloyd [00:18:44]:
And that’s again. But you just can’t have both. You can’t have a small town feel and drive in the bright lights of the big city. You can’t have them both. You cannot have your cake and Edith.

Wes Moss [00:18:54]:
And have that growth that this city has shown over the past five years, ten years, decades, great prosperity. Can’t have it all.

Jeff Lloyd [00:19:02]:
Now there are folks listening in smaller towns that said, hey, we’ve had a prosperous time in my small town. And that’s true, too. That’s true, too. Think about prosperity. What happens when the Federal Reserve cuts interest rates like they did not this past week, but the week before? It was, it was everything. It was probably the biggest economic event of the year. It’s what we talked about for the first nine months of the year. How many cuts are we going to get? When is the Fed going to lower rates? When are we going to.

Jeff Lloyd [00:19:32]:
And it finally happened.

Wes Moss [00:19:33]:
It was like a countdown to the Fed cutting.

Jeff Lloyd [00:19:35]:
Countdown to Fed cut. And we got a half a percentage point, which is a big deal. And what the question is, first of all, this is the first time it’s happened in a long time. We’ve gone almost four years from, since the Fed has cut rates because they basically, they increased rates for almost two straight years, then they left them there for over a year. And we finally are getting some rate relief. They’ve cured the inflation problem. Now, they didn’t say they’ve cured it. They don’t want to say.

Jeff Lloyd [00:20:04]:
They don’t want to claim victory. But we know that inflation is very close to their 2% target. Now. They’re worried about unemployment going too high, so they’re focusing in on lowering rates so that the job market doesn’t continue to go. We don’t see unemployment expand beyond what the, the Fed would like to see. So we get a full half a percent cut. It certainly impacts all the different asset classes. So what happens to stocks? What happens to bonds? What happens to cash? When we did, we did a podcast, and I think we did this year on money matters, too, way back in 2001, I remember talking about income investing.

Jeff Lloyd [00:20:42]:
We were talking about stocks and dividends and bonds and interest and energy pipeline companies and distributions. And we kind of skipped over cash because it was zero yield, zero. It wasn’t even a cat. Now, it was a category for safety, dry powder liquidity, hey, if I need to get to it. But there was, it wasn’t low interest. It was, it literally was no interest. And here we are in 2024, and it’s kind of incredible to see what’s happened with money market rates. In fact, I’ve got this great chart, if I can find this, I’m gonna skip right to this.

Jeff Lloyd [00:21:21]:
If you look at where money markets were so if you go back to the 0% days. So 2001, as an example, the amount in money markets essentially stayed flat, which makes sense. In fact, people pulled money out of money markets. And then the minutes, well, maybe a couple months after the Fed started raising rates because it meant money market rates were starting to go up. Money poured into money markets to the tune of really hundreds of billions and hundreds of billions of dollars pouring into money markets. Because if you think about it now, if you could get 5% with money sitting in a money market, and a couple of years ago, it was zero. Hey, that sounds pretty good. Sounds really good.

Jeff Lloyd [00:22:08]:
And that’s exactly what happened. The question will be, what happens now? So Fed just lowered. You’re going to start to see money market rates come down as of this past week. As an example, I have a whole list of big money market funds that are essentially, if they’re paying 5.1% today, a month ago they were paying 5.3%. So they’ve come down a little bit. If they’re paying 4.7% today, they were paying 4.9% a month ago. So they’ve already started to creep down a little bit because, a, we knew the Fed was going to cut rates, and b, they’ve already, now they’ve actually done it. Three years ago.

Jeff Lloyd [00:22:43]:
I have a list of seven money market funds. Every single one of them paid zero. They all paid zero.

Wes Moss [00:22:51]:
Nothing.

Jeff Lloyd [00:22:51]:
So when you look at your money market and you say, man, it’s only, it’s now I’m only getting 4.9% because you were getting 5.1. Well, guess a month ago. Guess what, you were getting zero three years ago.

Wes Moss [00:23:06]:
Just three years ago. I know, that’s really amazing to think about the effect that interest rate increases have on things like money markets. Three years ago, zero.

Jeff Lloyd [00:23:17]:
Well, start in reverse. We usually start with stocks, and then we go to bonds and we go to cash. So we’re starting with cash. Here’s the great news, is cash is still an asset that has pretty significant interest at this point. And even if the Fed continues to lower, let’s say we bottom out at three or 3.5% are money markets. That’s still not, that’s not zero. So it’s still a productive part of the overall bucket system that we look at when it comes to stocks and bonds and alternative areas and cash, they’re all paying at least some significant level of income. So that’s obviously one thing that has changed with lower rates.

Jeff Lloyd [00:24:02]:
We’re going to see your money market rates come down. That is just a function of the federal funds rate.

Wes Moss [00:24:07]:
They’re going to come down. I think it’s safe to say we’re not going to get back to that 0%.

Jeff Lloyd [00:24:14]:
In fact, if you go Jeff Lloyd, that’s a good point. A couple of weeks ago when the Fed spoke, Hal mentioned that. He said, yes, rates are going lower and we’re dedicated to softening economic restraint so the labor market doesn’t get hurt. But he also alluded to, we’re not going back to zero. I think that’s a good thing. We don’t want to go back to zero. The interesting thing about the fixed income market, bonds, especially treasury bonds, we’ll get to stocks next. That’s a little bit more nuanced of what happens when rates go down or up.

Jeff Lloyd [00:24:50]:
But the yield on the ten year treasury note, that’s the interest rate that the mortgage rates play off of, and it’s the benchmark of interest when it comes to the bond market. Again, big categories of income investing, stocks that pay dividends, bonds that pay interest. That’s what we’re talking about. Now. Historically, we’ve actually seen slightly higher rates on the ten year treasury note or bond after the feds begin to cut rates. Counterintuitive. If rates are going down, why would I Treasury rates go up? So it may be a little counterintuitive, but I think it’s a reflection of just expectations if the economy performs well post rate cuts, and investors may be thinking, well, maybe future rate hikes are needed to keep inflation in check. So it’s this cycle of what happens with the economy.

Jeff Lloyd [00:25:45]:
The other thing here too is that rates were already going down, the ten year rate was already going down in anticipation. Then the Fed lowers markets already priced that in. So to some extent makes sense that rates rise just ever so slightly. And that’s actually what we’ve seen. On the corporate bond side, things start to get a little more interesting because we’re worried more about credit when it comes to treasuries. You’re not worried about the, well, at least we’re not supposed to be worried about our government not being able to pay back its debt. That’s a whole nother story. But on the corporate bond side, we start wondering, well, if we have to lower rates, if we lower interest rates, does that mean the economy is getting worse and does that mean the credit paying ability of companies in general start to slide? So we get different movements when it comes to the corporate bond side, it’s still though a function of rates.

Jeff Lloyd [00:26:40]:
Yield is destiny, but in the bond market as a bond investor, remember that our yield is still a very big determinant of what we make over the subsequent years. So with the ten year was at almost five, then it went under four, then it got down to close to three and a half. Here we are slightly above that. That’s still our destiny. To some extent. That really moves the meter. And on the short end of the interest rate market, the federal funds rate, which is still in the high four range, that’s still a big determinant of where fixed income or what it should pay us over the coming year or so. So rates are still in a decent spot.

Jeff Lloyd [00:27:24]:
They’re a long way above zero. So we still like where bonds are today. Yield is destiny. And that brings us to equities, brings us to stocks. What happens with stocks? Well, here’s a chart from that the great Jeff Lloyd found. And we’re looking at, we’re trying to find periods of time that rhyme with where we are today. All time highs, market doing well, and fed starts cutting rates. And we have 20 instances, Jeff Lloyd, when this has happened since 1980 and what happened.

Jeff Lloyd [00:27:58]:
Yeah.

Wes Moss [00:27:58]:
So we’re looking at how the s and P 500 has performed after rate cuts with the market being within 2% of an all time high. So we have 20 instances since 1980 where that has happened. So what does the data say?

Jeff Lloyd [00:28:15]:
Where are we six months later on average?

Wes Moss [00:28:18]:
So six months later, you’re up a little bit over three and a half percent. The markets are up a little over three and a half percent on average.

Jeff Lloyd [00:28:27]:
Once the Fed starts cutting.

Wes Moss [00:28:29]:
But if you extend that out to a year and you look a year after within 2% of an all time high and having a Fed rate cut, we have 20 instances. All instances, the market was higher a year later, on average, up a little bit under 14%, 13.9%.

Jeff Lloyd [00:28:48]:
That’s rare that you see a study where with this many instances, there’s 20 of them. 19, 80, 83, it happened twice. 85, 86, 90. I mean, this happened 20 different times. And every single time and again, we don’t know where we’re going to be a year from now because that’s what we’re measuring every single time. We’re positive, on average, 13.9% one year later after a rate cut. So pretty clear what economic history tells us. Rate cuts, pretty good for stocks, pretty good for the stock market, potentially good for your 401k.

Jeff Lloyd [00:29:31]:
With that, we’re going to run to weather traffic right here on WSB radio. Then more money matters. What do we do? Oh, we got election results, not results of route the election, but results of what happens post the election period, three months later, six months later, and a year after we get through that early November day at the polls. Stay tuned. More money matters straight ahead. Good morning, and welcome back to money matters here. It’s Sunday morning. Your host Wes Moss here along with Jeff Lloyd.

Jeff Lloyd [00:30:34]:
And one thing we’re going to talk about what happens post an election, a presidential election to the stock market by listener request. The other piece of data we pulled this week I think is important to note when it comes to where we are in the cycle, rates going down, what does that mean for stocks? Well, we still have very much positive interest rates. That’s still good for cash and money markets. It’s still good for bonds. Why wouldn’t you just put money in a money market? If rates are similar? It’s because money markets are going to change really quickly. So if the Fed keeps lowering, then those rates will go down very quickly. So they lower the target rate down to three. Money markets go down to three, whereas with fixed income, if you can lock in a 4% yield for several years, you’re kind of locking in that higher interest rate.

Jeff Lloyd [00:31:25]:
The other thought around. Yes. Equity markets have tended to go up 20 out of 20 periods of time. When the market’s at an all time, near an all time high and the Fed cuts, you go a year out, and it’s been higher since 1980 every single time out of 20 different occasions. What’s also continued to increase is the overall cash flow that comes from stocks, which, of course, dividends. If you look back in the year 2020, the S and P 500 paid out about 484 billion, which sounds like an enormous amount of money in cash dividends to investors. Then the next year was at 5111, over half a, that’s 500 billion, also known as a half a trillion dollars, 22 was around 540 last year, almost $590 billion, up 90 billion from a few years prior. That’s cash flow coming out of s and P 500 companies to shareholders.

Jeff Lloyd [00:32:27]:
So there’s this very powerful thought around the rate of dividend payouts growing at a substantially higher rate on average, then the rate of inflation. It’s one of the reasons we really like dividends, particularly dividend growers. Now, Jeff Lloyd, what’s our election data? Not the results of the election, but the stock market results post an election. Go back to 1972.

Wes Moss [00:32:51]:
Yeah, we just kind of wanted to look at the data. What happens after a presidential election? What happens to the stock market? Three months, six months and twelve months after the election day. So we got 13 instances going back to 1972. And on average, three months after a presidential election, markets up about 3.2%. Fast forward three more months. So now we’re looking at six months worth of data. Six months after a presidential election, the market is up, on average, 6%.

Jeff Lloyd [00:33:22]:
Right, at 6%.

Wes Moss [00:33:24]:
And then a year, a year out from election, market is up almost 13%.

Jeff Lloyd [00:33:32]:
That’s enough data to go back over the course of economic history and show a real pattern that on and again, this is not every single year. I think it’s important to note that. But on average, you’re getting almost a 1% per month rate of return post election. Part of that is once you know, you know and the market, that level of uncertainty lifts and there’s some confidence for investors. Guess what? We gotta run. Jeff Lloyd, thank you for being here in studio.

Wes Moss [00:34:00]:
Thanks for having me back.

Jeff Lloyd [00:34:02]:
Bulldog brunch coming up. You can find me and Jeff Lloyd. It’s easy to do, so we invite you to visit us@yourwealth.com. that’s y o u, ryourwealth.com. and have a wonderful rest of your Sunday.