I did not stay up late to watch election returns come in last night – for various reasons. The main reason being, I am neither a politician nor a lobbyist. I am a financial advisor, and my ability to serve my clients and their best interests is not determined by the outcome of any single election. A good night’s sleep on the other hand….
This morning, I was somewhat surprised by the closeness of the Presidential race. Maybe it’s because I live in an urban area and in a particularly blue neighborhood. Maybe the reporting on the campaign and poles has been a little lopsided – at least from the media I am exposed to (social, journalism, entertainment). Maybe I just thought the political cycle had run its course and was now shifting like it normally does. Whatever the reason, I expected a more decisive victory for the Democratic ticket. To be clear, I am not giving you a glimpse behind my personal political curtain. I am not saying I desired a blue victory. I am also not saying I desired a red victory. I am simply saying that my expectations leaned towards a clearer win for Democrats this year – a relative “Blue Wave” if you will.
I guess that still could happen since ballots are still being counted this morning. However, it seems that the Senate and House will remain as is, and whoever wins the White House will have the same challenges to get business done as in the last 4 years.
Again, politics are not my area of expertise, so, forgive my failed expectations and half-hearted political predictions. On the other hand, in the world of financial advice – which is what my clients pay me to focus on – I have been pretty much spot on. We do not have a decided election yet, but the investment market has not imploded, exploded, or eroded. Why? Three reasons:
- There are weightier matters for business and the economy right now than policy can simply fix. COVID-19 coronavirus.
- Investors have very few choices of where to put their money right now for return.
- There are always winners and losers in any political regime.
- Bonus reason: American business is resilient and resourceful.
Of course, these are all short-term considerations and machinations. In the long-run none of it matters – financially speaking – because innovation will drive global investment returns, and we will forget this election/investment cycle just like we have forgotten what exactly happened in the 1884 election/investment cycle – spoiler: Democrats won with Grover Cleveland.
Bottom-line here: Do not trade around elections. In other words, do not shift your investment strategy based on what you think is going to happen in an election. You would never put your wellbeing in the hands of a fickle mob – do not put your financial wellbeing in the hands of an unpredictable electoral college. Rather, trust in the long-term investment process of diversification, average compounding returns, and risk allocation. This frees the investor to focus on areas that really matter – tax planning, estate planning, budgeting, risk management, etc.
I have said all along this campaign year – elections matter, but not to your investment portfolio. I do not know one of my clients that is not passionate about this country. We all want to see this county thrive, though we may disagree on how to achieve that. And, most of my clients want to see themselves and their neighbors thrive too. I have not talked to a client this year that did not intend to vote to influence and encourage right policy for thriving. Voting is a great privilege and civic duty – it matters. I hope you voted, just not with your investment portfolio.
*Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss. Past performance is not a guarantee of future results. This material may contain forward looking statements and projections. There are no guarantees that these results will be achieved. It is our goal to help investors by identifying changing market conditions, however, investors should be aware that no investment advisor can accurately predict all of the changes that may occur in the economy or the stock market.