Hello today, we are talking all about the upcoming midterm election and its possible impact on your retirement. Don't go anywhere, all that more on today's episode of the retire wants show.

Hello, and welcome to the retire. Once show the show designed to help you get to retirement, but most importantly, stay retired. I'm your host, Jonathan Rankin. I'm the founder and CEO of theor wealth management. And I'm joined as always by my lovely co-host. Hi, I'm Melissa Rankin. Thank you for joining us.

We have a great show in store for you today. We are talking all things, midterm election. It is that time of year. November's right around the corner. And after this show, we'll see, in two years we don't have to talk politics for two years. Well, yeah, but you'll see us next week. That's right. Yeah. We're gonna be back here next week and hopefully you, we want you to think we're taking a two year hiatus.

No, not at all. So make sure you hit that subscribe button so you could join us also next week and, uh, and, and build this retirement paradise that we're trying to help you build. I mean, that's, that's our goal here. So hit that subscribe button and make sure you check out that retirement toolkit. Uh, there's a link below in the description that you could download.

It's your guide to get helping you get to retirement without having to worry about money. So make sure you download that. So with that, let's jump in midterm elections. What's up for grab. Well, currently Democrats have the five seat majority in the house and the Senate is split. So there's gonna be some shake up here and actually hold on before we go any further, we just gotta put this out there.

This isn't a left or right conversation. This isn't us saying this. You, you gotta vote a certain.  we don't care how you vote, vote, who is happy. You're listening where you're very happy. You're listening very seriously. Thank you so much for being here, but, uh, this is not a political show. We are going to talk about what's objectively going on and what objectively might be able to happen in the stock market and for your retirement.

So how it impacts you. That's it. We're not here to talk about who should win, who shouldn't win. That. We'll leave that to the news networks that you wanna watch, whichever one you choose to watch. So with that, Five seat majority in the house that the Democrats have, and the Senate is split 50 50 and the upcoming election, there are 35 seats up for election in the Senate.

2020. One of 'em are currently held by Republicans 14 by Democrats. And then on the house side, all 435 seats are up for elections. So, uh, here we go. Could you imagine having that job where every couple years, everybody's just up for re.  well, think about your coworkers. I mean, you're kinda like, oh, I used to like, so and so, but now I, I might not have a job and I might not ever get to see them again.

I, and it makes you really think, how do people do that for 30 plus years and really just a lifelong poly, very odd to me, but, uh, that's what, what's a nerves. Go into it. I imagine. Yeah. Every couple years you have to redo this thing and just get out there with the horrible commercials that we're all gonna see and the signs on everybody's lawn.

And if you still put a bumper sticker on your car, that's the commentary. I'll have no bumper stickers. Let's just get rid of those. Because if I see, you know, a Barack Obama, 2008 sticker, or, you know, a Bush, 2004 sticker, come on now, like get that thing off there. That's just, when was the last time you put a bumper sticker on your.

I've never put a bumper sticker on my car. Really? No, I ever, no. That's like I did in college, but that's how old I am that no, that to me, a bumper sticker on your car is like a tattoo on your body. I just, it's not something for me. It's like a permanent thing and it's a sticker. It's a sticker definition.

Yeah. But you know what? I love our kids there. No kids bumper sticker going on our car. Um, at least on my car, it can go on your.  oh, don't put that out there. The kids are gonna hear this and be like, well, daddy said that you had put it on your car. No, I'm not putting it on my car ever. I, I don't care if they have perfect attendance, honor roll.

I don't think they do that anymore. I think that's again, how old we are. That that's what our parents got. My child is a honor roll student. Yeah. I mean, I think, well now they do that now because the world is woke. There's probably no more honor. Everybody's valedictorian. Oh, I'm sorry. Did you just say woke on that's the word of, okay.

Now of 2022, I'm living. That's the word of 2022. That's. Okay. Woke. Okay. So with that wokeness  all right back. Let's get back to, to the midterm election. So let's look at the chart here. So we gotta, oh, we've got charts. We've got charts. People have had asked for charts. Look at this, we got charts. We came prepared.

We deliver what you ask for. So if you have feedback. Had to retire one show.com. You could send us an email. You could submit a question. You can give us some feedback, like, Hey, throw some charts, throw some charts in there. So, uh, we got that. So take a look at the chart here. History tells us that the president's party has lost seats in the house 17 to last 19 elections.

So, uh, and that's going back to world war II. And the average seat loss is 27 seats. That's a lot. I mean, so yeah. There's all those people you were thinking about the jobs. I mean, yeah. I mean, 27, at least 27 people on average just had to go find something. What do you do as an old, you know, how, if you're not old, but I was like, oh, whoa, I, when you start, you know, calling people old, not old, but as a former, you know, as a, as a former member of, uh, house of representative, what do you do after.

I've never like heard the stories of, you know, you think of, if you play professional sports it's oh, well this person played football and now, you know, Troy Amans have commentate. Yeah. You hear that. But I don't really hear this person was the, uh, you know, the congressmen of, you know, the 43rd district of wherever.

I think it's because there's no broadcasting that, that goes into this kind of stuff after that. Otherwise think of there's the jobs that would open up. I mean, isn't that what CNN and Fox do? No, those. Journalists, but we dunno, we don't watch that stuff, but, uh, that's just neither here nor there. So, so if anybody knows the answer to that, if you could let us know that, you know, please let us know what a former member of Congress does after if, after they lose something.

I mean, when Hillary lost, she just went away. So what happens after, oh, maybe they write a book. Lots of people write books. Okay. Well, well now we're speculating, but now we're speculating and it looks like we're gonna have 27 books on average that might come out. I. Okay. So, uh, in the Senate though, the Senate has lost seats in 13 of the last 19 elections average seat loss.

There is between three and four, so it's a lot less people losing jobs there, a lot less people. Now, midterms are often reflection of the current administration and given the low approval ratings that we're seeing, not my approval rating, not yours, just the general approval rating. Um, um, I, I, I do wanna say that, I think that has a little bit to do.

The fact that, I mean, bikes aren't rid correctly, or so I, I mean, again, we're not political, but I feel like that's the kind of stuff that goes into maybe the low approval rating. That's true. I, I, I can, I could see that. I mean, you know, a lot of, what do they ask during presidential elections? Which president would you wanna sit down and have a beer with?

Or, you know, like Barack, which present do you wanna go out and maybe shoot some hoops? With with Biden's not, well, you don't wanna go ride a bike with that. You don't wanna go on a bike ride. No, absolutely not. So maybe that has something to do with it. Either way, the approval ratings are not great and that likely tells us we're headed towards a divided government.

Okay. So I have to, does it matter? I mean, well, does all of it really matter? Chart number two. Ooh, get another chart here. So here are the three possible outcomes that we've got and, uh, I love this chart because it makes it more whimsical when you're just looking at, you know, donkeys and elephant. So it's like, you're at the zoo.

It is, you're like you're at the zoo. And I think our political system is like a zoo, but, uh, so here we go. We've got three possible outcomes. We've got the donkeys who can keep both, it's like a sports game, you know, and the donkeys keep both here, but the elephants are coming right around. Yeah. The donkeys are off they're out of the gate.

Like a, like a voice or something like the Kentucky, it's literally a race. Yes. It, you know what. Why do you feel, why do we both feel like our minds are both  okay. So yeah. So team donkeys point ding, Don team donkeys can win. They could keep both elephants can take both or you have it split. So just remember when it comes down to the economy and stock markets, policy, not politics impact the economy.

So it's not about really who wins it's about okay. What happens after that? So the odds right now, Any sort of significant spending or tax cuts leading up to the midterm elections is very low at this point. So I don't think we're gonna see much between now and November, but after that, if we have a divided government, that's likely to limit some major changes on tax policy or any sort of government spending.

Now, if the Republicans win both, we're just gonna see in two years, I would imagine at that. We'll just, we'll see. In two years, nothing happened. We'll talk about the next election and have this same show. I thought we were still talking about the animals. Oh no, no, no. Now we're talking about the, the people who represent the okay.

The players of the animals. Oh, it was a lot more fun hearing. The, the, the donkeys and the elephants. It was now if the Democrats, or in this case, the donkeys. Thank you. Do win both. If there, those players win this game. See, see how much more fun that is. It is a lot more fun, but if those players win the game, then we're likely to see key initiatives like that build better back, move forward, and we're gonna see a lot more things, probably be pushed through.

Um, but like I said, if Republicans win both or even if they win one, it's gonna be more of a gridlock system. Again, if the elephants, now that leads us to what happens during that. Well chart number three, please. Well, as you could see, divided government since world war II, we've had economic growth at 2.7% and we've had market returns.

This is S P 500, that were 7.9% per year. So, uh, that gives you an idea of what to expect for economic growth in the market. If we do have a gridlock system, it doesn't mean that the economy in the market go nowhere. It's just saying that's what we're expecting for policy at that point. Okay. Moving away from our zoo, um, I guess analysis, if you will, what does it mean for your wealth?

Okay. So this is a question that we get all the time leading up to any sort of election. Now I'm going to, we're starting to get these questions now. And in about two years from now, we're gonna get 'em again. Okay. What happens if this party wins or what happens if this party wins? Okay, so let's look at just midterm elections in general.

So looking at stock market performance usually returns are back end loaded in midterm years.  chart four. There we go. Uh, as you can see, stocks have a lower average return in the first several months of the year, but they tend to rally at the end of the year. So as you could see, you know, between January and usually mid-October stock performances, typically negative or flat, uh, in fact, pre midterm election, the S P 500 has underperformed with about a 0.3% rate of.

During that, uh, that year leading up to the midterm election, which obviously this year is, uh, a little bit worse than 0.03%. I think we'd all hope for 0.03. But, um, we are seeing that negative or muted rate of return so far this year, but it's the post midterm election that, uh, that really counts. Yeah.

That's, that's what really counts. That's where everybody wants to know. Well, what happens if so, and so wins. Okay. Well, regardless of who win.  LA chart. Number five. Here we go. Got another one for you. Five. I mean, come on guys. You asked for charts, you got five. We just that's. I mean, round applause. Good job.

Uh, so as you could see, post midterm election stocks have historically outperformed the 12 month period after the, uh, after the election. So typical. On average, we see 15.1% in all other years, 7.1%. So it's a, it's a very strong performance that we see after that. I just wanna continue on a little bit, because again, this is our fifth and final chart.

So this is very important, very important. You can see that some years were actually even lower. I mean, the lowest being 1.1% in the 86 87 election, the highest being 33 point. In 1954 to 55. I mean, knowing that stocks they tend to do well with the midterm election. Do you change your investment strategy?

Are you trying to time up time it game the system? Well, no, you don't wanna do that. I mean, that's obviously history has shown us that Mar the market on average does well after. But we've got a lot of things going on in the current economy that, that might change that. Now we are starting from a lower base.

I mean, obviously the market's down double digit so far, and I don't know if that's going to get any better between now and November, but the reality is we are starting from a lower base. So if we do see the market rally, there's that possibility. So if history or. Petes itself, essentially, we could see that, but do you really wanna change your strategy and, and try to time that and say, you know what, this is what's happened.

Let's just buy all equities and, and hope that we see another, let, just jump all in . But the reality is, look at what we've got. You know, this market and economy have to face right now. We've got, you know, the fed that's tightening already into an inverted yield curve, which go just type inverted yield curve into Google.

And all you're gonna see is. Leading indicator for a recession. So we've seen that for a while. So maybe don't type that in you might. I just spoiled that for you.  uh, the real fed funds rate is still near all time lows. Now this is taking the fed funds rate and, you know, the inflation rate subtracting those two, we're still negative at this point.

So the fed has got a long way to go to really fight this inflation, which means that they're likely to raise in streets longer than anticipate. I mean, fed fed share Powell came out and. There's going to be pain. I mean, if they're telling you there's going to be pain, I'm going to, you know, anticipate there might be some pain moving forward.

It's probably a wise choice. We're already starting to see housing starting to slow. So there's that part of it as well. And you know, right now the market still is favoring growth and we know history tells us that in new bull markets, There's always a change in leadership there. So if we're still favoring the, the stuff that God is here and not, what's going to get us where, you know, the future's going to be, we're still where we need to be, where we need to be.

We're still favoring the, uh, the old market. I, I think there's still going to be some volatility moving forward. So I would just say stick to your plan, uh, make sure that your investment strategy, you are comfortable with the risk you're taking, you're comfortable with, you know, how it fits into your retirement plan.

And that's the part where I think a lot of. Fail is that they just invest to invest because they were told this is a standard strategy I should utilize, and don't really integrate it with their financial plan. So if you haven't integrated your investment strategy with your retirement plan, we'd be happy to help you.

There's a link below where you can schedule some time for us to go through a completely free comprehensive retirement. And that is something that we believe everybody should have, um, regardless of the midterm elections or not, we think that you should always be doing that kind of stay ahead of where you're at.

Yeah. And now we look at what's happened on the interest rate side and, you know, there's so much conversation about these target date funds that everybody's been investing in that are just, you know, down significantly when they people thought these were conservative asset allocation funds. So. Now's the time where you really want to analyze what you own, make sure that it fits your strategy.

And Hey, I hope that history repeats itself. I would love to have this conversation in a year and say, Hey, look, we actually outperform that 86 87. That's how great things are now. Exactly. But we just don't know. And with a, in a very aggressive fed, fighting a very high entry or inflation rate, I just think there's a lot of risk to, to be wary of, especially if your, uh, if your retirement is either.

On the horizon in the next few years, or you're even retired right now. So be cautious, stick to your plan and let us know if you don't have a plan, we'd be happy to help you. And with that, I mean, we hope you like these charts. Yeah. I, we really hope you like the charts. I mean, we wanna make sure you got charts.

So look at that. We're here to deliver what you want. Head to retire once show dot. Submit a question for us. Tell us if you like to chart or not. If you want more or less, you can also download that retirement toolkit and let's schedule some time to connect as well. With that. I am Jonathan Rankin and I'm Melissa Rankin.

Thank you for joining us.

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