An Interesting Time to Be an Investor!

By: Zachary Bouck, CFP®

How will politics play a role in market performance in 2024?

In an election year it is always good to remind ourselves that the market is bipartisan. Market trends usually have more to do with the performance and innovation of the companies represented and less to do with who is sitting in the oval office. As much as we all want our political party to be better for the economy, historical data makes it clear that the US economy has grown under both republican and democrat presidents.

Should we worry about what the Fed is up to?

Jay Powell has to be the most stressed out guy in the world. Investors hang on his every word, and his comments cause billions of dollars of market fluctuations instantly. Lucky for him, what drives markets over the long term is the innovation and the performance of the best companies in the world.

 Interest rates will impact company decision-making, but innovation and company leadership is much more important than interest rates. Currently, large companies have the money to back up their desire to innovate. Corporate innovation and profitability will drive the market in the right direction, not the decisions of the Fed.

The impacts of AI beyond tech.

AI continues to leave its mark on everything that it touches. Tech companies that have a role to play have already seen a large bump in their value, but this bump will not be limited to the tech world. Companies outside of tech have been able to leverage AI to increase productivity in incredible ways.

A notable example of this is a law firm that uses a language model to write the first draft of 200-page S-1 filings when taking companies public. This process, which used to take 2 weeks, can now be done in 45 minutes. Companies that are willing to adopt AI and leverage it to increase productivity will benefit greatly from this powerful technology.

The possibilities of nuclear energy.

Over the last few decades, energy efficiency has been the large focus for the entire energy sector. This may need to shift in the coming years. With extra strain being put on the grid due to increasing numbers of EVs and AI power usage, the US grid may be looking for an upgrade. Nuclear energy is proving to be a compelling solution. But don’t take it from me, take it from Amazon who has just acquired a nuclear-powered data center while also receiving approval to build a new campus strategically placed near a nuclear powerplant in Pennsylvania. While traditional utility companies grow in value, nuclear energy may be another option to keep an eye on.

Action items from Austyn & Zak:

1. A major step to building wealth is to have a systematic investment plan in place. This looks like having an automated investment schedule and a plan for how you buy and sell.

2. Backdoor Roth conversions can make a significant difference in how much tax-free money you have access to in retirement. You can do this by contributing to your traditional IRA and then converting that money over to your Roth IRA.

Disclosures: The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly. Stock investing includes risks, including fluctuating prices and loss of principal.​ There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.​ ​The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful. Contributions to a traditional IRA may be tax deductible in the contribution year, with current income tax due at withdrawal. Withdrawals prior to age 59 ½ may result in a 10% IRS penalty tax in addition to current income tax. Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA.