Ep. 87 Investing Amidst Uncertainty: A 2024 Election Discussion with Michael Townsend
With the 2024 U.S. presidential election approaching, investors are facing increased market uncertainty. Geopolitical tensions, potential tax law changes, and congressional instability—including the ousting of the Speaker of the House and the risk of a government shutdown—are all adding to the complexity.
In this episode of Live Life Liberated, Matt Griffith, CFP®, Senior Wealth Advisor, and Chris Osmond, CFA, CAIA®, CFP®, Chief Investment Officer, speak with Michael Townsend, Managing Director of Legislative and Regulatory Affairs at Charles Schwab & Company, about what investors can expect in the months ahead.
Key Topics Covered:
- The current political landscape and market uncertainty
- The speculation around Biden or Trump dropping out
- The potential impact of a split Congress on tax and financial policy
- How markets historically perform before and after elections
- Why long-term investment strategies matter more than short-term political shifts
The 2024 Election: Political and Market Implications
What Investors Need to Know About the Political Landscape
Washington is experiencing one of its most volatile political cycles in decades. Speaker of the House Kevin McCarthy’s removal in October 2023 created legislative gridlock, and a looming government shutdown threatens further uncertainty. Meanwhile, foreign policy concerns, including Ukraine, Israel, and China-Taiwan tensions, add another layer of unpredictability.
“October 2023 was the nuttiest month I’ve seen in Washington in my 30 years here.” – Michael Townsend
With inflation, interest rates, and economic growth in flux, investors must navigate the election cycle carefully.
Will Biden or Trump Drop Out?
Speculation continues about whether President Biden or former President Trump will ultimately be on the 2024 ballot. Concerns about Biden’s age and health persist, while Trump faces multiple legal challenges.
“My operating assumption is we will have a Biden-Trump rematch. But there are a lot of voters who are unenthusiastic about this potential matchup.” – Michael Townsend
Despite these uncertainties, investors should focus on policy outcomes rather than political drama.
A Divided Government: What It Means for Tax and Economic Policy
What’s at Stake in Congress?
- Republicans need two Senate seats to regain control.
- Democrats are poised to retake the House, potentially flipping both chambers.
- If Congress is split, expect continued gridlock and delayed policymaking.
“We have never had an election where the House and Senate flipped in opposite directions—it would be unprecedented.” – Michael Townsend
A divided Congress could mean prolonged inaction on key financial policies, particularly tax reform.
The 2025 Tax Cliff: What Investors Should Prepare For
One of the biggest post-election issues will be the expiration of the 2017 Tax Cuts and Jobs Act (TCJA). Key provisions set to sunset in January 2026 include:
✔ Higher marginal tax rates (top rate returning to 39.6%)
✔ Estate tax exemption cut in half (from ~$26M per couple to ~$13M)
✔ Changes to deductions and pass-through business tax rules
“The estate tax is one of the least partisan tax issues in Washington—many Democrats support maintaining higher exemptions due to its impact on family-owned businesses.” – Michael Townsend
While some provisions may be extended, expect heated debates over revenue needs and deficit reduction.
Market Performance and Investment Strategies During Election Years
How Do Markets Historically Perform in Election Years?
Historically, election years have been strong for the markets. Since 1928, the S&P 500 has averaged a 7.5% return in presidential election years.
“Markets tend to perform well during an election year—uncertainty creates volatility, but history suggests solid returns.” – Michael Townsend
However, policy implementation takes time, meaning major shifts often don’t happen immediately post-election.
Does Political Party Impact Market Performance?
While many assume one party is better for the markets than the other, historical data suggests otherwise:
✔ The market has performed better under Democratic presidents (5–6% higher annual returns)
✔ The best configuration for market stability? A Democratic president with a Republican-controlled Congress
✔ Unified governments—regardless of party—show similar market performance
“There is almost no difference in market performance under a unified Republican or Democratic government—investors should focus on broader economic trends.” – Michael Townsend
How Investors Should Approach Election-Year Volatility
What to Avoid: Emotional Decision-Making
Election years often trigger fear-driven investment moves. Many investors:
❌ Delay investments until after the election
❌ Sell assets prematurely due to uncertainty
❌ Overreact to political rhetoric
“Elections are emotional events, but investors should focus on long-term goals, not short-term politics.” – Michael Townsend
How to Stay on Track
✔ Maintain a diversified portfolio – Election cycles introduce short-term volatility, but diversification helps mitigate risk.
✔ Monitor tax policy changes – High-net-worth individuals should work with advisors to optimize tax strategies ahead of potential shifts.
✔ Ignore the headlines – Most campaign promises never translate into real policy. Focus on long-term investment fundamentals.
“No policy in Washington is ever guaranteed—investors should be wary of pundits claiming otherwise.” – Michael Townsend
Final Thoughts: Cutting Through the Noise
With political uncertainty, tax policy changes, and market volatility, staying disciplined is key. Instead of reacting to headlines, investors should:
✅ Assess their long-term financial goals
✅ Prepare for potential tax changes in 2025
✅ Consult with advisors to optimize their investment strategy
If you need guidance navigating the 2024 election’s impact on your portfolio, contact Centura Wealth Advisory at (858) 771-9500 or visit centurawealth.com.
For ongoing insights, listen to Michael Townsend’s podcast, WashingtonWise, available on Apple Podcasts and Spotify.
Disclaimer
The information covered and posted represents the views and opinions of the guest and does not necessarily represent the views or opinions of Centura Wealth Advisory. The content has been made available for informational and educational purposes only. The content is not intended to be a substitute for professional investing advice. Always seek the advice of your financial advisor or other qualified financial service provider with any questions you may have regarding your investment planning.
Centura Wealth Advisory (Centura) is an SEC-registered investment advisor with its principal place of business in San Diego, California. Centura and its representatives are in compliance with the current registration and notice filing requirements imposed on SEC-registered investment advisors in which Centura maintains clients. Centura may only transact business in those states in which it is notice filed or qualifies for an exemption or exclusion from notice filing requirements. Past performance is no guarantee of future results. Tax relief varies based on client circumstances, and all clients do not achieve the same results.
