Chart Talk: June 26th 2024


As we inch closer to the election, the more we see clients worried that the result won’t favor their candidate.  Worried about the economy, worried about their portfolio, worried about the direction the country is headed – worried, worried, worried.  I don’t want to sit here and tell you not to worry, it’s impossible.  We are humans with emotions which is precisely what makes us vulnerable during stressful times.  It is also what makes us different.  Our entire life we question “what if.”  In fact, there is an economic field of study called behavioral economics that examines the “why” behind humans and their financial decision- making process.  Exactly how do human beings arrive at a conclusion and subsequent point of action.  The bottom line is that quite often humans act irrationally (surprise, surprise).  As investors, it is always important to question the motivation behind any potential trade – are you acting intelligently or emotionally?  Are you listening to the pundits who claim that “it is different this time.”  What if they are right?  What if they’re wrong?  At Fagan Associates, we attempt to weigh the known against the unknown utilizing history as a guide.  By trying to identify where these fundamentals overlap with history and where they don’t, we will then take a position regarding the future.  Below is a chart that details significant events over the past century in hopes that the corresponding performance of the stock market may soothe these concerns.

As the chartdetails, $1,000 invested in 1928 would be worth $307,956 today.  This includes a 90% drawdown the followingyear (1929), a 29.72% pullback in 1974, and even more recently, a 39.23% marketcrash in 2008.  Since the beginning of1928, the S&P 500 has averaged 11.67% per year - 96 years of data we canrely on.  Is this election different?  We have experienced the financial crisis of2008, the tech bubble of the early 2000’s, stagflation during the 1970’s,etc.... One could go on and on about events that disrupted the financialmarkets over the short term. Nonetheless, here we are, sitting at 11.67% annual returns.  I am not sitting here telling you not toworry.  There is always something toworry about.  However, let me pose thefollowing question to ponder – is there greater risk in thinking it’s differentthis time and adjusting your portfolio accordingly or is it more prudent toassume that regardless of the outcome this November, the economic miracle thatis America will continue to thrive regardless of who occupies the White House.

This presentation is not an offer or solicitation to buy or sell securities. The information contained in this presentation has been compiled from third party sources and is believed to be reliable, but its accuracy is not guaranteed and should not be relied upon in any way, whatsoever. Fagan portfolio characteristics and holdings are subject to change at any time and are based on a representative portfolio. Holdings and portfolio characteristics of individual client portfolios may differ, sometimes significantly, from those shown. This information does not constitute, and should not be construed as, investment advice or recommendations with respect to the securities listed.

Additional information including management fees and expenses is provided on our Form ADV Part 2. The actual return and value of an account fluctuate and, at any time, the account may be worth more or less than the amount invested. Bond Investments are affected by interest rate changes and the credit-worthiness of the issues held in the portfolio. A rise in interest rates will cause a decrease in the value of fixed income positions. Past performance results are not indicative of future results.”

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