If you’ve turned into the news lately then it’s obvious that we’ve entered into a time where there’s a ton of political noise. It’s been said before and it’s being said again, this is the most important election of our lifetime. We have to ask ourselves, is that really true?
2016 was said to be the most unprecedented election ever. Before that, 2012 and 2008 were the most important ever.
What’s interesting is that it seems like every time there’s an election, it’s ‘THE MOST IMPORTANT ELECTION IN HISTORY!”. It’s that really the case? More important than the election of our 1st President, George Washington? What we do know to be true is that the Media as to make it seem so. They have to give you a reason to keep you tuned in.
Now, you may still be wondering, what will the market do is the election result is “X”?
So let’s take a look at previous elections and how the markets did. What we find is that there is no correlation between who is in the White House and the Stock Market. Going back to 1961, there have been only two presidents that have had negative returns when they left office. Against conventional wisdom, they have both been Republican Presidents. One of those faced the beginning of a financial crisis and before that, the other faced an oil embargo*. We believe that it doesn’t matter which party holds the White House but external circumstances effect return much more than political parties.
It’s easy to base your investment decision on your political beliefs and our feelings but that can be harmful. It’s my experience that investors that allow themselves to be influenced by emotions and headlines, perform poorly.
Don’t get me wrong. This election is important. It will determine how you will invest. The question is, “Will you allow the news and the emotions they stir up influence your decisions, or will you stay disciplined and stick to your plan?”
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The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Securities offered through LPL Financial, Member FINRA/SIPC
Source: J.P. Morgan Asset Management; (Top) Barclays, Bloomberg, FactSet, Standard & Poor’s; (Bottom) Dalbar Inc. Indices used are as follows: REITS: NAREIT Equity REIT Index, EAFE: MSCI EAFE, Oil: WTI Index, Bonds: Bloomberg Barclays U.S. Aggregate Index, Homes: median sale price of existing single-family homes, Gold: USD/troy oz., Inflation: CPI. 60/40: A balanced portfolio with 60% invested in S&P 500 Index and 40% invested in high-quality U.S. fixed income, represented by the Bloomberg Barclays U.S. Aggregate Index. The portfolio is rebalanced annually. Average asset allocation investor return is based on an analysis by Dalbar Inc., which utilizes the net of aggregate mutual fund sales, redemptions and exchanges each month as a measure of investor behavior. Returns are annualized (and total return where applicable) and represent the 20-year period ending 12/31/19 to match Dalbar’s most recent analysis. Guide to the Markets – U.S. Data are as of June 30, 2020.1
The Standard & Poor’s (S&P) 500 Index tracks the performance of 500 widely held, large-capitalization US stocks. An investment cannot be made directly in a market index.