USA, USA, USA

YouTube TV has ushered in a whole new era of watching the Olympics. When I was a kid, I watched one event at a time. Now I can watch 4 events at once, all on the same screen. It enabled the ability to not only watch gymnastics, the big swimming events, or the mens’ basketball games, but all the other ancillary sports, too. Doubles badminton, 3v3 basketball, synchronized diving, judo, even cross-country equestrian (aka horses jumping obstacles in the woods) are all there to watch to your heart’s content.

I absolutely love the Olympics. Michael Phelps got in the pool for 5-6 years in a row to prepare to be the greatest swimmer ever. He calculated he added 52 additional training days by not taking holidays off. It motivated him to know that if he took a day off from the pool, it would cost him 2 days to get that training back. That’s great fodder for a coach like me who likes to tell his basketball girls the Navy Seals quote, “You don’t rise to the level of your competition, you sink to the level of your training.”

If you had a chance to see the men’s gymnastics team competition this past week, then you saw Stephen Nedoroscik. Who? He’s the American (in my day, he would’ve been called a nerd) with glasses, who was in Paris for one event, the pommel horse. He sat on the bench all day with his glasses on. But when it was time for the pommel, he shed his glasses, crushed the routine, and jumped off into his teammates’ arms. The teammates went crazy - Stephen just secured bronze, the first US men’s team medal in 16 years. If you haven’t seen it, I encourage you to pull it up on YouTube. I guarantee goose bumps and maybe watery eyes. It’s awesome.

And how about Simone Biles? She admitted to the “twisties” in Tokyo, code for a mental block that leaves a person “lost in the air.” It cost her multiple events at the Tokyo Olympics. What a great story to see her back for Paris, and to see her overcome her fears to recapture gold. She’s now the most decorated American Olympic gymnast in history.

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Before the Paris Olympics started, and certainly after it finishes this weekend, we will be debating another contest- Red vs Blue. Which party will be the better choice to win the White House? And in the stock market world, it’s easy to get caught up in the importance of the decision. We’ve just been through a historic stretch in modern Presidential history. In the span of 24 days, Joe Biden demonstrated he might not be capable of serving a second term. Then the assassination attempt on Trump’s life. And finally Biden withdrew from the race. Of course, this has created uncertainty and consternation in many of us. Will Trump win and institute tariffs which drive inflation higher again? Will Harris win and raise taxes, stifling growth? Will she ban fracking? Will either of them solve the border crisis?

The media loves to focus on the Presidential race. Even the financial channels, like CNBC, will talk about “the Trump trade” or analyze Harris’ VP pick based on his policies in Minnesota. The pundits try to handicap which stocks and which industries stand to gain if one candidate or the other wins.

History says this is little more than cable TV hot air. Since 1923, including the Great Depression, Great Financial Crisis, and a World War, the President doesn’t appear to correlate with stock market returns. Consider the table:

But wait, there’s more! Schwab’s research, led by Chief Investment Strategist Liz Ann Sonders, outlined the power of ignoring the party in power and instead staying invested with this chart:

Instead of trying to time the market by being invested only when one party or the other is in power, the best approach is to stay invested. From 1961 to 2023, $10,000 in the market would have become $5.1 million. Had you only invested under a Republican, you would have $102,000, and $500,000 had you only invested under a Democrat.

What has historically been more important is the business cycle. As I’ve outlined a couple times, and as today’s data appears to show, the economy is slowing. Fed Chairman Powell raised interest rates from 0 to 5% specifically to slow down the economy and bring inflation down. Inflation is down dramatically, with truflation.com suggesting it is down to 1.5%.

The unemployment rate moved up last week to 4.3%, the highest since 2021. The rise in unemployment likely portends a slow down, albeit off an incredible high. This, along with other global events such as the movement in the Japanese Yen vs the US Dollar likely led to a drop in the markets over the past few days. The combination of a slowing (global) economy and lower inflation will spur Chairman Powell to lower interest rates. Either way, the US is still the strongest economy in the world. History shows that through economic downturns, wars, and other geopolitical events, the US economy continues to grow, driving the stock market higher.

In the meantime, I will watch the Olympics and watch American athletes rack up more medals than any other country. Rather than worrying about whether red or blue wins in November in order to drive the stock market higher, stay invested for the long term and keep chanting “USA, USA, USA.”

Jared

Planning Pays Dividends

Returns by President from Retirement Researcher in this article: https://retirementresearcher.com/are-republicans-or-democrats-better-for-the-stock-market/

“Stay Invested” chart is from Charles Schwab’s “Emotional Rescue” article found here:

https://www.schwab.com/learn/story/emotional-rescue-markets-fed-policy-and-elections

All YCharts graphs are created by me, Jared Kline.

Truflation chart comes from Truflation.com

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