Election Plea

Election Plea

Every election period I put out charts and data talking about the election.  More specifically, I make a case for the fact that the markets don’t truly care about who gets into office.  Not to say it isn’t important on many levels, as it is, however, the markets aren’t one of those areas that are heavily influenced by who occupies 1600 Pennsylvania Ave. 

I’m going to choose not to use a bunch of fancy graphs and data today and talk about the historical realities as we see them.

What we know

Elections have many far-reaching implications.  Generally speaking, the most affected areas are likely to be policy decisions.  I firmly believe this election and the fallout are more geo-political and policy.  If you are pro-life or pro-choice.  If you are pro-tax cuts or anti-tax cuts, or more specifically where you stand on the most likely impacted income bands.  What are your thoughts on the different military fronts going on worldwide? 

These are all issues, that we/me see as driving the election and the likely fallout.  Notice, what I didn’t harp on is what the S&P 500 will do depending on who gets into office.  Why?  Again, because I don’t see it having more than a short-term impact. 

What to expect

What we do expect, as it pertains to the markets, is plenty of volatility in the short term.  As the election becomes closer and closer, and likely shortly after we can see a pretty volatile market.  Why?  Well, the market dislikes uncertainty and elections are the epitome of uncertainty.  In general, the market is a pretty efficient vehicle for growing wealth over time.  However, when there is so much unknown as to the direction of things markets can get jumpy one direction or the other.  The good news?  Come November 6^th, or so we hope, the uncertainty becomes certain as the outcome of this historic election becomes known.

Depending on who wins you can likely expect some rotation of investors as depending on your affiliation you may be more bullish or more bearish accordingly.  This is all a long-winded way to say markets generally get volatile the closer elections come, and then get less volatile as they subside.

My Plea

Here is my plea to all investors over the next couple of months as the election comes and goes.  Simply do nothing!  Markets don’t care if you like Trump or Harris.  Markets also don’t care if you are nervous about one vs the other.  Markets care about the global world economy, which no one person or policy has the power to truly change.  I recognize this can be a very difficult thing to do as emotions trigger our internal, innate fight-or-flight instincts.  That said fight the urge to do anything.  These things are highly unpredictable and the best way I know how to ride these things out is to keep a view on the long term and sit on your hands if you get at all nervous.

The only way I know how to make a mistake in investing is by letting short-term market concerns dictate your long-term investment strategy.  This is maybe the most important investment lesson I could ever teach.  The markets are betting on the long-term expansion of companies and our economy.  Trying to bet on and invest in short-term prognostications is truly a fool’s errand.  You can’t build an investment strategy on that basis and certainly, these things are too unpredictable to make concrete decisions on.

My Other Plea

I’m sure this is preaching to the choir, but we know there are a lot of emotions and implications not market-related when it comes to elections.  Last election was the ugliest and least proud I’ve ever been to be from this great nation.  I can only hope that whatever the outcome, we accept it and band together as a nation to remember; One nation, under God indivisible- for liberty and justice for all.

Stay wealthy, healthy, and happy.