This Too Shall Pass

The election cycle in the United States is nearing the finish line, with less than 30 days to go until Nov. 8th. Inevitably, during client account reviews, the discussion turns to the election and the potential implications it may have on portfolios and retirement plans.

I want to take a moment to share a “calming perspective” to a time and a topic that is often anything but calming: the presidential election.

Does the stock market care which party wins?

Research from Goldman Sachs has shown the stock market has been rather indifferent to which party ends up in the White House. As a matter of fact, the 12 months following presidential elections have averaged a median total return of 10% regardless of whether Republicans or Democrats took office. Recent events also seem to indicate that constant media attention drawing us into the “political storm” tends to ultimately result in minimal impact on investments long term.

Election cycles come and go every four years. Some elections, like this one, are more volatile and passionate than others. We would expect a highly volatile media period over the next 30 days and the potential for volatility in stocks over the next 6 months.

That being said, I want to offer the following reminder: First, this too shall pass. And, as investors, the most important thing to remember is you are invested for the long term. It sounds almost cliché to say it, but the secret to surviving the volatility that comes with investing is having a well-constructed financial strategy and an advisor you can turn to for guidance through the storms.

Consider asking your advisor the following questions:

  1. Is it time to review my portfolio and plan?
  2. Is my portfolio’s risk still aligned with my goals?
  3. How would a sustained downturn affect my investment plan?
  4. Should we be making any changes based on the current economy and recent news cycle?

It is important you continue to make investing decisions based on your long term strategy and no be overly swayed by the temporary fluctuations caused by current events. If you have any concerns or would like to talk, please give me a call or email