Presidential Elections & Your Portfolio
By: Michael Foster, CFA, CFP®
Coverage of the upcoming Presidential election is hard to escape right now. Of course, you come across all sorts of stories and articles on the news and various social media platforms. Those are to be expected on a relatively consistent basis, even not in an election year.
The way I know things are ramping up for this election cycle comes from the unexpected and less frequent places: a non-political sports podcast, the roadside sign of a storage unit facility, and (everyone’s favorite) the unplanned and awkward conversation with family while on vacation. I’ve come across all of these in the past few weeks, and I’m confident I’m missing a few more. I figured why not add to the mix? If the storage unit place can do it, so can I.
We’ve started getting questions from clients on both sides of the political spectrum on what to do in their investment portfolios in preparation for and after the election. Should you make a change if your preferred candidate wins or loses?
The short answer is that I don’t think so in either case. Markets have been surprisingly resilient over time despite which political party has held the Oval Office. This isn’t to say that the President’s policies and actions don’t have any effect on markets. They almost certainly do. It’s just not the only thing that matters to investment returns. I like the following quote from Dimensional Fund Advisors when summing it up: “US presidents may have an impact on market returns, but so do many other factors—the actions of foreign leaders, interest rate changes, changing oil prices, and technological advances, just to name a few.”
I’ve posted a chart below that shows how the US Market, represented by the S&P 500 Index, has performed over different presidencies. In addition to this chart, I’ve found the resources at the end of the blog helpful.
None of this is to say that you shouldn’t care about who wins the election. You should for a variety of reasons near and dear to you and your views! I just would try to avoid letting the outcome influence the decisions made for your long-term financial plan.
Extra Resources:
- Dimensional Fund Advisors - How Much Impact Does the President Have on Stocks?
- Vanguard - Market Hindsight Tool (go through the pre-built election scenarios)
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The market and economic data are historical and are no guarantee of future results. All indices are unmanaged and may not be invested into directly. The information in this report has been prepared from data believed to be reliable, but no representation is being made as to its accuracy and completeness.
Nothing in this material should be construed as investment advice offered by Dolan Capital Advisors, Inc. This market commentary is for informational purposes only and is not meant to constitute a recommendation of any particular investment, security, portfolio of securities, transaction, or investment strategy. No chart, graph, or other figure provided should be used to determine which securities to buy, sell or hold. No representation is made concerning the appropriateness of any particular investment, security, portfolio of securities, transaction, or investment strategy. You should speak with your own financial professional before making any investment decisions.
Past performance is not indicative of future results. Dolan Capital Advisors, Inc. does not guarantee any specific outcome or profit. These disclosures cannot and do not list every conceivable factor that may affect the results of any investment or investment strategy. Risks will arise, and an investor must be willing and able to accept those risks, including the loss of principal.
Certain statements contained herein are statements of future expectations and other forward-looking statements that are based on opinions and assumptions that involve known and unknown risks and uncertainties that would cause actual results, performance, or events to differ materially from those expressed or implied in such statements.
Ben Dolan and Michael Foster are investment advisor representatives of Dolan Capital Advisors, Inc., a SEC-registered investment adviser. Investment advice offered through Dolan Capital Advisors, Inc.