Be Glad Your Investable Assets Don’t Care About Politics
Elections can be nerve-wracking. Add a pandemic, disconnected employment situation, and toss in some civil unrest and it is not surprising that many are on edge. We recently have fielded several calls from concerned clients about the impending regime reconfiguration at the highest elected offices in the nation. The concerns are uniform. The only difference being the respective political viewpoints held.
We are not political experts, we are financial planning professionals. When queried by our clientele about our leanings, our response is and always will be the same. Our political beliefs are as follows: “To preserve your assets and garner a fair rate of return on your hard-earned capital over time.” That is the answer I would want from my financial professional. A simple look at history shows that the market simply does not care which political party is in power.
The Stock Market Performs Best under Which Party? The Answer is ‘Yes”
Investors in general assign too much credence (and blame!) to elected officials for stock market performance. Everyone searches for confirmation of their own bias to help justify their beliefs. The really good news? As evidenced above, The Equity and Bond Markets don’t have a political party.
Some other good news: no one knows how the markets will react in the short term. In election times, an added layer of fear is present. Another word we have for fear is ‘opportunity’.
No matter which party you back, you probably feel strongly that the person or party you vote for will have a positive impact on the country, the economy and the stock market. It’s also likely that you feel strongly that if the opposition prevails, the opposite will occur. Recall in 2016 that the overarching belief was that if the incumbent party lost, it would be curtains for the equity markets? The result? The exact opposite happened! Conversely when I pointed out to a client that the S&P 500 market was up 175% under Obama, they were astonished.* (see the chart below if one were to invest strictly by party) *https://www.macrotrends.net/2482/sp500-performance-by-president
As the world is polarized and anxious, we as a firm pray for a more meaningful resolution within the hearts and minds of our fellow citizens. Our assets are near all-time highs and never have we seen so much misery. Not to be flip, yet the old adage “Money doesn’t make you happy” sure does come to mind.
Make no mistake, we are going to rely on our 80-plus years of combined experience and do what we do best. Tune out the noise; focus on our core belief that investing in good companies with good prospects will get us through and reward us. We have strong faith that we will come out ahead.
