We have no idea how stock markets or the economy will behave in the short-term as a result of the attempted assassination of former President Donald Trump. What we do know is that the S&P 500 was at 134.28 when President Ronald Reagan suffered an attempted assassination on March 30, 1981 and although the market fell to 112.27 one year after the assassination attempt (a decline of 16.39% ), over the long-term (as of July 16, 2024) the S&P 500 has grown 42 fold to 5,667.20 as the index has been on an overall upward trend in the intervening four decades. Likewise, the stock market and economy survived the assassination of President John F. Kennedy in 1963 and the assassination in June 1968 of his brother, Robert Kennedy, who was running for the Democratic presidential nomination. Finally, we also know that the American financial system survived an attempted assassination as far back as the turn of the century when two time President Theodore Roosevelt was shot in October 1912 as he sought a third term as an independent after being rebuffed by his own party. These were events that rocked the nation on many levels and are still discussed today in a historical context to gain insight into a nation’s socioeconomic fabric.

Despite our preamble, this is not a story about politics however, it is a story about the realities of life. Regardless of where your political affiliations lie, we will posit four things:

1. These events are horrific and the loss of life and potential loss of life is tragic on many levels to say the least.
    
2. We have said for years that the market and economy do not care who the president is as long as individuals with capital can still allocate it as they see fit and where it can best be exploited. In other words, money will go where it is best treated and corrects imbalances. This is the beauty of the information passed along by the pricing signal, and if you think about it, this is what we do all the time as consumers. When eggs are too expensive at grocery store A, then you go to grocery store B where they’re cheaper. The market responds and it's that simple.
    
3. History can teach us plenty, when President Trump was elected in 2016 many predicted that terrible things would happen to the country and the economy. Oddly, the same things were said in 1976 through 1980 when Jimmy Carter was president. The former is a Republican, while the latter is a Democrat, which is just an observation of the fact that there are those that will predict social and economic gloom and doom regardless of a leader’s political affiliation.
    
4. Most importantly, a bigger driving force for the economy and asset prices is the M2 money supply and whether it is growing or shrinking. The US money supply, which grew by an unprecedented 27% during COVID, is the root cause of the inflation that’s been lingering since the tail end of 2020. However, the M2 growth rate is currently decreasing and inflation is trending down, which could also lead to interest rate cuts. Please keep in mind that we are not predicting what the Fed will actually do, we are only saying that the money supply and whether it is growing or shrinking will have a bigger impact than who is president in the US or prime minister in Canada.

In closing, we should abhor the loss of life that did happen on July 13 when a former fire chief literally laid down his life to protect his wife and daughter by diving down to shield them from the gunman’s line of fire. This is a tragedy.

What we should not do is change our long-term investment plans, history has already taught us that.

Randy, Ian & Harrison