September 3, 2024

It begins with campaign ads that sound more like Hollywood movie promotions. Then there’s the debates, which resemble chaotic family Thanksgiving dinners where Uncle Bob is yelling at Aunt Sue about politics while the turkey catches fire. Following is the constant barrage of emails, texts, and phone calls from campaign teams, “Hi, this is Karen from the campaign. Just wondering if you’d like to donate your life savings, your firstborn, and possibly your soul to our cause?” And the cherry on top: Conspiracy theories.

Even if you’re reading this after the election is decided (let’s steer clear of that subject), the dust is likely far from settled. To avoid burn-out or burning yourself with poor decisions about your investments, here’s what we need to be reminded of:

  1. Embrace the Chaos: Election years are notorious for their market volatility. Politicians make grand promises, pundits predict doomsday scenarios, and markets react like a cat on a hot tin roof. It’s all part of the show.
  2. Tune Out the Noise: Stick to your long-term strategy. Remember: investing is a marathon, not a sprint. Investing is different than trading.
  3. Understand the Political Promises: Often, changes are slower and less dramatic than predicted.
  4. Stay Calm During Market Swings: Stick to your investment plan and call your advisor if you’re struggling.
  5. Understand Post-Election Adjustments:
    • Short-Term Impact: The immediate post-election period can see sharp movements, but these are often short-lived as markets adjust to the new administration’s policy directions.
    • Long-Term Trends: Over the long term, market performance tends to reflect broader economic cycles and fundamentals rather than the party in power. Historical data shows that, over decades, markets have generally trended upwards regardless of the presidential administration.

Overall, while elections can cause short-term volatility and sector-specific movements, long-term market performance is more closely tied to broader economic conditions and fundamentals rather than the political party of the president. Onward!