What do presidential elections mean for your portfolio? Should you change your investing strategy based on who wins? Elections bring a lot of noise, and I wanted to dispel some market myths around this election.
Myth #1: Elections usually bring big market swings.
You would think elections cause major market shifts (given all the politicking and intense emotions). However, history shows that elections historically don't influence market performance as much as the economy does.
The Federal Reserve recently voted to cut interest rates, shaving 0.5% off the benchmark . (1)
Markets rallied exuberantly at the news, reaching new highs. (2)
Why did the Federal Reserve cut rates?
With inflation on a strong downward trajectory and concerns about economic weakness rising, the Fed clearly decided now was the right time to cut. The size of the cut was a surprise to many, who expected a quarter-point cut and could indicate that the Fed feels strong action is warranted. Some analysts believe lowering interest rates will lower the risk of a recession and increase the odds of a “soft landing” for the economy. (3)
When it comes to grocery prices, some items have seen more dramatic changes than others. Take eggs and pork, for instance.
Although prices have dropped in recent months, egg prices in June 2024 were 10.2% higher than those in June 2023. (1) Meanwhile, pork prices increased by 3.81% from last year. (2)
These fluctuations show how unpredictable food prices can be. And when we look at more specialized items, like those used in sushi, the price changes can be even more striking. (3,4)
