“Trump is going to start WWIII, and ruin the economy.” 

“Biden-omics have put our economy in the trash.” 

“I’m going to wait to invest until I know what will happen in the election.” 


 

I want my clients to feel fully confident in their portfolio and its ability to help them achieve their stated goals. Simply put, I want them to have peace.

Nothing attempts to derail that peace more than an election season.  

If you’ve made a comment similar to those above at a meeting with me, please don’t feel singled out. I assure you that I have the utmost respect for you and usually understand your perspective.

When I hear these statements, I might think:

 

1. You’ve been prompted to feel fearful. 

Media outlets construct endless negative headlines to draw attention and increase fear (while increasing their revenue). The exaggerated headlines are even more explosive during election season. According to the news, we are always seemingly on the brink of market collapse. However, that simply hasn’t been reality. This Bloomberg chart shows the ebbs and flows of the market over the last 30 years. Over this period, a lot happened:

  • 9/11 
  • Tech Bubble 
  • 2008 mortgage crisis 
  • 2020 pandemic 
  • Impeachments, wars, Brexit, high interest rates, low interest rates…. 

Despite this, equities (particularly U.S equities) have continued to provide return. If you want to understand more about why I think investing is way less scary that the alternative (letting inflation eat your purchasing power), read Is the Stock Market Risky? 

2. You’re filtering the economy through the lens of your political affiliation.  

We all believe we think objectively. We want to be sophisticated beings uninfluenced by personal emotions or bias. However, we are humans… humans with lived experiences and feelings. No one is truly objective. Neither am I.  

Let this JPM chart based on Pew Research show you just how biased the country can be. 

Let me break this chart down. While Bush was president, GDP was a mild 1.9% and S&P return was -4.5%. Members of President Bush’s party rated economic conditions more favorably than the opposing party.  When President Obama was in office and experienced GDP growth of a moderate 2.2% and S&P return of 16.3%, Republicans thought economic conditions were worse than the prior decade. 

For the record, political policies don’t always have calculable results. It could take numerous quarters for a change in political regulation to filter down into actual GDP change. So much of what falls into each presidents’ term is pure happenchance.

3. You’re listening to the loudest voices. 

You might have said something like, “Everyone I know is selling their stocks before the election.” 

No, no they aren’t. You’ve just heard three opinionated co-workers talk about selling their stocks, so it feels like “everyone.” 

The funny thing is, probably only one of those friends  actually ended up selling all of their stocks. One other was just contemplating it, and the other one only sold one small holding. They were all talk. 

In reality, about 80% of the stock market is controlled by institutional investors. Meaning, it is mostly professional investors who are making big market decisions rather than your neighbors. The vocally opinionated and expressive people we happen to know are not “everyone.” 

Even if “everyone” is selling their stocks, that’s not a reason to follow suit. The best decision for YOU and YOUR financial goals will look different than “everyone” else’s. 

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So, what should you do?

Stay the course. It’s natural to feel swayed by news headlines and the opinions of those around us, especially during election season. However, making investment decisions based on fear or bias can jeopardize your long-term financial goals.

Remember, market fluctuations are normal, and history shows us that equities tend to recover and grow over time. Your investment strategy should be based on your individual goals, risk tolerance, and time horizon—not on the noise of the current moment.

If you ever feel uncertain, I’m always here to discuss your concerns and help you navigate these turbulent times.