The Modern Investor

 Written by Human Advisors, for Human Investors

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Investors React to Election with Big Stock Market Gains. What Can We Learn from the Previous Election?
Investing Eric Blattner Investing Eric Blattner

Investors React to Election with Big Stock Market Gains. What Can We Learn from the Previous Election?

The U.S. stock market responded to Tuesday’s election with big gains. International stocks fell, as did bonds. What does this mean, if anything, about what we can expect for the next four years?

We looked at how markets behaved following 2020’s election. Keep in mind, our economy is complex and markets react to a wide variety of inputs. Elections and government leadership are just part of the puzzle.

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Looking Past the S&P 500: Is Everything at All-Time Highs?
Investing Eric Blattner Investing Eric Blattner

Looking Past the S&P 500: Is Everything at All-Time Highs?

If you are reading this, the odds are high that you don’t have 100% of your investable assets in an index fund tracking the S&P 500. You probably own other types of investments. So, what about smaller companies? Or foreign companies? Or other asset classes? Are they also at all-time highs? It turns out other pockets have not participated in this run, at least not to the same degree.

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Time to Buy Bonds?
Bonds Eric Blattner Bonds Eric Blattner

Time to Buy Bonds?

Is it time to buy bonds?

This question has become much more common as interest rates have risen. Recently, the yield on 10-year U.S. Treasury bonds hit 5% for the first time since 2007. Many money market mutual funds (say that five times fast!) are yielding over 5%.

So, are bonds a good buy now? Here are a few considerations before pulling the trigger.

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Three Things About Higher Rates
Economy, Bonds, Stocks Eric Blattner Economy, Bonds, Stocks Eric Blattner

Three Things About Higher Rates

Interest rates on bonds haven’t been this high in about 15 years. Whether you consider this to be good or bad news may depend on your perspective. Higher rates generally offer a better starting point for bond investors, and high-quality bonds may be in a better position to offset other risks in your portfolio. Stock investors traditionally have been willing to pay less (in terms of P/E multiples, for example) for expected earnings as interest rates rise, which can put pressure on stock returns. Regardless, history has seemed to reward stock owners over the long term, even in periods characterized by higher interest rates.

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