What should I do with my investments in election years? That is a question that comes up frequently in presidential election years. Contrary to some economists and market commentary “experts” who give compelling opinions, election results have had very little impact on long-term investors. Historically, U.S. stocks have trended up regardless of whether a Republican or Democrat won the White House.
During election seasons like we face again this year, current economic and political challenges seem unprecedented. Looking back in history there have always been volatile markets and tumultuous events. Controversy along with uncertainty have surrounded every campaign. Since 1936 whether a Republican or Democrat claims victory, the result has not been a deciding factor in how a $10,000 investment made at the beginning of an election year looked 10 years down the road.
The gyrations of the “stock market” are irrelevant to owners of portfolios of enduringly great companies that are run by very smart people who figure out ways to adjust as needed to continue profitable operations and pay dividends. Our clients and successful long-term investors are owners of those great companies and not speculators on “the stock market”.
The equity market cannot be consistently timed any more than the economy can be consistently forecast. Thus, the only way of assuring that one will realize the full permanent return of the mainstream equities is to hold them steadfastly through temporary declines.
Getting caught up making decisions because of short-term gyrations of the markets (over a few months or even a year or two) usually diminishes the net results (over the long term) of investors that do NOT have a financial plan in place. Those that have and act upon well thought out and designed financial plans typically fare better than investors that react to current news and events.
So, I leave you with this. The long-term “big picture goal” is having a plan that creates income that one does not outlive and growing a legacy to the people or institutions one loves most, not one that compares account values from statement to statement. Successful investors maintain proper long-term perspectives in all types of market conditions and cycles with diversified well-managed portfolios. Some choose to self-direct their own investments. Many choose to work with a trusted financial advisor who is also their behavioral coach who helps them keep their plan on track and guards them from giving in to impulses and feelings, especially when markets are volatile.
If you have need for a trusted advisor, reach out to our office and we would welcome the conversation. I wish you much success! - Ron
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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations
for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional
prior to making a decision.