In any normal election year, there’s a lot going on and a lot of market volatility, but fittingly, this time it seems different. However, when it comes to investing, it’s not worth trying to predict the future.
Indulging political fears or expectations by making major changes to your investments can be particularly damaging. While trying to speculate the market reaction to a specific event for example a Trump reelection or Biden victory, may not be worthwhile, historical trends about stock market performance before, during, and after presidential elections can help set expectations for wary investors about what has happened in the past. History is a helpful guide, but as we all know, the future has no promises.
By design, elections have clear winners and losers. But the real winners were investors who avoided the temptation to base their financial decisions around election results and stayed invested for the long haul. That’s because U.S. elections have, historically speaking, made essentially no difference when it comes to long-term investment returns (see chart below).
For investors, it’s important to step back, put personal feelings about politics aside, and objectively assess the situation and what it might mean for your personal finances. Tune the noise out and focus on your goals and the personal financial plan we built together.
If you’d like a review of your goals, financial plan, current situation or have any questions about your investment or insurance needs, please feel free to reach out to me.