Dougherty Dispatch: New Prez Elected—Run to the Hills–or to the Bank?

November 8, 2024
Dougherty Dispatch: New Prez Elected—Run to the Hills–or to the
Bank?
What a month in the financial markets! As we have told our clients in Hernando County before, do not let your political emotions control your investment decisions. Historically, long-term market results ignore who the president is. Be careful of social media rants and shortsighted investment projections, up or down.

Some questions our firm has been receiving:
1. Will there be a recession? It’s like the question, “Will I die?” Yes, but not today. Or next week and probably not next month. Our economy is chugging along pretty well with few of the usual suspects that create recessions. We don’t have
extremely overvalued real estate or stocks, high inflation, or very low consumer confidence.

2. Will markets crash? Probably not soon. See prior answer. And they didn’t the last time Trump was in office. But historically we’ve always had crashes and crashes don’t care who is president.

3. Will tips, social security, and overtime income become tax-free? Yes, and I’m happy to announce that all future income for our firm will be treated as tip income. Kidding! Traditionally, except for a couple of small hidden exceptions, our nation has always taxed all work income the same. It would be a nightmare to implement these crazy ideas—and be very unfair. It’s hard to believe Congress would pass this.

4. Will new tariffs increase inflation? They didn’t when Trump imposed them in his first term. And, Biden kept most of them in place, so he wasn’t too concerned about them, either. Often the threat of tariffs are used as a negotiating tactic to get fairer trade deals.

5. Will tax laws change? Not much. The big tax law changes from 2017 reduced tax rates, created bigger child credits, and changed itemized deduction calculations. They are scheduled to sunset in 2025. Don’t worry: Virtually all will be renewed because politicians hate to raise tax rates—even though government currently spends 35% more than it collects—each year. Every time collections increase, spending increases more.

6. Can Elong Musk help Trump reduce government spending? Maybe, but it will be much more difficult than landing a rocket back to its launch pad—or sending a man to Mars.

The Dougherty Investment Advisors Team

Past performance does not guarantee future results.