Stock Market All-Time Highs: The Election and Fed Meeting

November 14, 2024

Last week was rewarding for long-term investors, with election results and a Fed meeting providing the catalysts to boost several major stock indexes to all-time highs. Summarizing last week’s trading, the large-cap S&P 500 gained 4.66%, the Nasdaq 100 increased by 5.41%, and the Dow Jones Industrial Average rose by 4.61%. All three of these indexes made fresh weekly all-time-high closes.

 

Election Boost: S&P 500 Crosses Above 6,000

 

As last Tuesday's election results were finalized, markets had one thing on their mind: higher stock prices. Wednesday brought us a sharp rally in major stock indexes as government bonds dropped and yields rose. The broadest benchmark of the U.S. economy, the S&P 500 crossed the key psychological level of 6,000 and settled slightly beneath it to close out the week. Long-term investors will take it!

 

Federal Reserve (Fed) Rate Cut

 

As widely expected, the Fed cut the benchmark rate by 25 basis points at last week's November meeting — no surprises there. The move is the follow-up to the central bank’s large 50-basis-point cut in September, which brings the current target lending rate range to 4.50% - 4.75. The rate cut vote was unanimous. The move supports the labor market, with further data needed to gauge the current state of inflation. Major stock indexes were steady after the rate decision and subsequent Fed commentary, and stocks closed positively on the day as bond yields traded lower after being higher the day before.

 

Powell Press Conference

 

Fiscal Policy: As usual, attention turned to Federal Reserve Chair Jerome Powell’s 2:30 PM press conference after the 2:00 p.m. rate decision release last Thursday. Powell had some memorable responses during the Q&A session, notably some commentary on overall fiscal policy. “The federal government’s fiscal path, fiscal policy, is on an unsustainable path,” Powell said. “The level of our debt relative to the economy is not unsuitable, the path is unsustainable…. And we see that in a very large deficit, you’re at full employment [and] that’s expected to continue, so it’s important that be dealt with,” Powell added. “It is ultimately a threat to the economy.”

 

“Not Permitted Under Law”: It is widely known that relations between President-Elect Donald Trump and Powell may not be the most amicable, and the question about it came up during last week's presser. When asked if he would step down if the President-elect asked him to, Chair Powell’s response was a resounding, and short:  “No.” Questions surrounding the topic surfaced again later in the conference, with another reporter asking if the president-elect had the authority to fire or demote Powell.  The Fed chair responded that such an action is “not permitted under law.”

 

Volatility Fizzles

 

The most widely watched measurement of stock market volatility, the $VIX, dropped substantially on the heels of the election results and the Fed rate cut. The $VIX, aka Fear Index, closed under $15.00 last week — trading near the summer 2024 lows, indicating investor fear leaving the marketplace. After a down week for volatility and the $VIX declining by over 30% last week, are investors too optimistic in the short term? Objectively, much uncertainty was removed from markets last week, with known election outcomes and a known Fed decision. It will be about the Consumer Price Index (CPI) this week, and we will see how volatility reacts after the best week of 2024 for the S&P 500 and the Dow.

 

Consumer Sentiment

 

With all the talk last week surrounding elections and the Fed, what about the consumer? Fresh University of Michigan consumer sentiment data shows the consumer once again remaining resilient and cautiously optimistic. The UoM November consumer sentiment metric rose to a print of 73.0 versus 71.0 expected, much better than estimates.

 

This Week = CPI

 

It is that time in the data release cycle, and traders want to know where the nation stands on inflation. With the 25-basis-point cut in the books and government bond yields rising on the open market recently overall, eyes will be peeled on this all-important inflation metric being released this Wednesday morning.

 

The Takeaway

 

The start of November is very constructive for long-term investors. With the election out of the way and the market response looking favorable, attention will now shift back to inflation data and the direction of future Fed policy. This week has the data releases (PPI, CPI) that are needed to shape near-term market direction and consensus after a stellar run in major stock market indexes in October and to start in November. November is historically a good month for stock indexes. Bond yields and the U.S. dollar are also in focus right now.  We will be staying on top of the latest developments to keep you informed.

 

As always, if there is anything on your mind regarding the markets and your strategy, please contact us and we will connect to discuss.

 

The Order of Returns

April 29, 2026
The first four months of 2026 have been a useful reminder that markets do not move in straight lines. After entering the year at record highs, U.S. equities pulled back sharply on geopolitical tensions tied to the Iran conflict, with the S&P 500 coming close to a ten percent decline before recovering much of that ground. Volatility has returned again on rising energy prices and a softer tone from the technology sector that has carried so much of this cycle’s leadership. Oil sits near one hundred dollars per barrel, the ten-year Treasury yield hovers near four and a half percent, and traditional diversification between stocks and bonds has been less reliable than many investors have come to expect. None of this changes our long-term view. It does sharpen a conversation we believe every household within ten years of retirement, on either side of that line, should be having right now. THE QUESTION THAT MATTERS MOST After more than thirty years of advising families through every kind of market, I have come to believe that one question matters more than almost any other in retirement planning. It is not what your average return will be. It is not even how much you have saved. The question is this: in what order will those returns arrive, and what will the portfolio be doing when they do? Two households can finish their working years with identical balances and identical long-term average returns. One can run out of money. One can remain wealthy for life. The only difference between them is the order in which good and bad years happened to fall. WHY ORDER MATTERS MORE THAN AVERAGE When a portfolio is accumulating, a market drop is something close to a gift. Contributions buy more shares at lower prices. When a portfolio is distributing, the same drop is a wound. Every dollar withdrawn during a downturn cannot participate in the recovery, and the base from which all future growth compounds is permanently smaller. Retirees who began withdrawals in 1973, in 2000, or in 2008 lived through outcomes quite different from those who retired even two or three years earlier or later. Same averages over the long arc. Very different lives for the family. THE RETIREMENT RED ZONE Retirement planning does not begin the year you stop working. It begins five to ten years before. We sometimes call that window the retirement red zone, and it is the period in which the wrong portfolio, held too long, can do real and lasting damage. A portfolio that served someone beautifully through their fifties is rarely the right portfolio for the first decade of withdrawals. Waiting until the retirement date itself to reposition is not a plan. It is a hope. HOW WE REPOSITION PORTFOLIOS Repositioning is a multi-year process, not a single trade. We model honest cash-flow needs in dollars. We construct one to three years of withdrawals in stable, liquid reserves so no client is ever forced to sell equities into a falling market. We build an intermediate layer of high-quality bonds to refill those reserves over time. We sequence withdrawals across taxable, traditional, and Roth accounts to manage lifetime tax cost, often using the years before Social Security and required minimum distributions for thoughtful Roth conversions. We rightsized concentrated and legacy positions over multiple tax years. And we stress test the plan against a meaningful market drop in year one before any client crosses the retirement line. A CLOSING THOUGHT Sequence risk is not really a math problem. It is a human one. The discipline to reposition during good markets, when it can feel almost unnecessary, is what separates retirees who sleep well from those who reach for the wrong decision at the worst possible moment. By the time a dramatic market drop arrives, the work either has been done or it has not. Whether you are a long-time client of Affinity Capital or considering a relationship with our firm, we would welcome a conversation about how your portfolio is positioned for the years ahead.

What a Noisy World Means for Your Portfolio

March 26, 2026
If it feels like the news cycle has been louder than usual lately, that's because it has been. Geopolitical tensions across multiple regions, shifting U.S. trade relationships, and a rapidly changing domestic political landscape are all contributing to elevated market volatility. We want to take a moment to share our perspectives on what this means for your portfolio and for the broader inflation picture. What's Happening Globally We are in an extraordinary moment. The U.S. is reshaping its economic and geopolitical relationships in ways that are accelerating global fragmentation and creating real uncertainty for businesses and investors alike. Energy markets have been particularly sensitive to these developments, with commodity prices responding sharply to supply disruptions and shipping route concerns. Most forecasters believe current disruptions are short-lived and expect prices to moderate as conditions stabilize, but the range of outcomes remains wide. Closer to home, affordability has become the defining political issue heading into the midterm cycle. The administration is rolling out consumer-focused measures around housing costs, prescription drugs, and credit, which could benefit some sectors while creating headwinds for others. What This Means for Inflation The inflation picture is nuanced right now. If current disruptions prove temporary, the impact on consumer prices should remain limited. However, if tensions persist and energy prices stay elevated, we expect to see some upward pressure on inflation over time. It is worth keeping in mind that energy prices, while attention-grabbing, are historically less influential on long-term inflation than factors like wage growth and domestic demand. The broader U.S. picture reflects a tension between tariff-driven price pressure on one side and softening economic momentum on the other. The Fed is navigating this carefully, balancing inflation concerns against labor market signals. For now, rates appear likely to hold steady near term, with modest cuts possible later in the year if conditions warrant. How We're Thinking About Your Portfolio Volatility is uncomfortable, but it is not the enemy of long-term wealth building. History has demonstrated consistently that market disruptions driven by geopolitical events tend to be temporary in nature. Long-term investors are best served by staying anchored to their goals and risk parameters rather than reacting to the news of the day. This environment does reinforce several principles we apply in managing your portfolio: maintaining thoughtful diversification, ensuring fixed income allocations reflect your actual income needs, and being intentional about where inflation and energy exposure sits within your overall strategy. We are monitoring developments closely and will continue to adjust positioning as the picture becomes clearer. As always, if anything here raises questions specific to your situation, please reach out. That conversation is exactly what we are here for.

What the New Tax Legislations Mean for Your Tax Plan in 2026

March 12, 2026
If you’ve been paying attention to the tax landscape this year, you already know the ground has shifted. New tax legislations signed into law last July made sweeping changes to the federal tax code—and for high-net-worth individuals and families, the implications are significant. Let’s cut through the noise and share what we think matters most. First, the seven-bracket individual rate structure from the 2017 Tax Cuts and Jobs Act is now permanent. That means the top marginal rate stays at 37 percent. For years, many of us were planning around the possibility that rates would snap back to 39.6 percent in 2026. That’s off the table. If you’d been accelerating income into prior years to avoid a potential rate increase, it’s time to reassess that strategy. Second, the standard deduction was made permanent at its elevated level. For most of our clients, this doesn’t change the calculus—you’re likely itemizing anyway—but it’s worth noting if you have family members in simpler tax situations. Third, and this is the big one for estate planning: the federal lifetime gift and estate tax exemption is now permanently set at $15 million per individual, indexed for inflation. No more sunset. For married couples, that’s $30 million you can transfer free of federal estate tax—and that number will only grow with inflation adjustments. If you’ve been hesitating on gifting strategies because of uncertainty around the exemption, that uncertainty is gone. There are also new wrinkles in the charitable deduction rules. Starting this year, itemized charitable deductions are only available for amounts exceeding 0.5 percent of your adjusted gross income, and the deduction is capped at 35 percent for taxpayers in the top bracket. That’s a meaningful change from the prior 60 percent AGI limit for cash gifts. If philanthropy is part of your wealth plan—and for many of our clients, it is—we need to rethink how and when you give. The SALT deduction cap has also been adjusted, rising to roughly $40,000 with phase-outs starting around $500,000 in modified AGI. For those of us in Texas, the lack of a state income tax softens this blow, but if you hold property in high-tax states, it’s still relevant. Here’s our takeaway after thirty years of doing this: certainty in the tax code is rare. When you get it, act on it. The permanent nature of these provisions gives us a genuine planning window. Let’s not waste it. If you haven’t reviewed your tax plan since last summer, let’s schedule a conversation.