By Nicholas R. Bair, CFP, ChFC, Wilde Wealth
Many investors are asking the question: “Does it really matter who gets elected for my money and the stock market?” With political campaigns ramping up and debates turning into a high-stakes game of “who’s got the better soundbite,” it’s natural to wonder if your investment strategy should take a detour into the political arena. Let’s break it down.
1. Market Volatility and Uncertainty
Imagine the stock market during an election year as a rollercoaster ride at your local amusement park. It can be a thrilling ride if you enjoy that kind of thing, but for most of us, it’s more of a “hold on tight and hope for the best” situation.
What You Can Do: Instead of white knuckling it through the ride, remember that rollercoasters are designed to be safe, even if they seem scary. Similarly, market volatility is a normal part of investing. Keep your eyes on the horizon—your long-term financial goals—and stay calm. Just like you wouldn’t get off the rollercoaster midway, don’t bail out of your investment strategy because of election-year jitters.
2. Policy Promises vs. Reality
Politicians’ promises can sometimes feel like a magician’s trick: lots of flashy moves and big claims but little substance when you look behind the curtain. Campaigns are full of grand visions, but the reality of turning those promises into policy is a bit like trying to assemble IKEA furniture without instructions.
What You Can Do: Rather than getting swept up in the spectacle of campaign promises, stick to the basics of investing, like focusing on solid companies and long-term strategies. Think of it like buying a reliable car instead of being tempted by the flashy ad for the “newest, greatest” model. A well-thought-out investment plan is your dependable vehicle through the political circus.
3. Historical Market Trends
Looking at the market during an election year is like looking at the weather forecast and expecting the forecast for a single day to tell you what the entire year will be like. Sure, it might rain today, but it’s not the end of summer!
What You Can Do: Check out the historical data and remember that the market has a long track record of bouncing back. Historically, the stock market isn’t easily swayed by who sits in the Oval Office. It’s a bit like being a sports fan; your favorite team might have a rough season, but that doesn’t mean you stop being a fan—or stop investing!
4. The Impact of Policy Changes
Think of policy changes like a new seasoning on your favorite dish. A little bit might make things more interesting, but it doesn’t completely change the flavor. One president might prefer a spicier approach, while another might opt for a milder touch, but the fundamental recipe for the economy remains the same.
What You Can Do: Diversify your investments as you would mix various ingredients in your dish. Don’t put all your eggs in one basket or invest based on a single policy change. A well-seasoned portfolio can handle whatever changes come out of the political kitchen.
Does It Matter Who Gets Elected?
In the grand scheme of investing, the identity of the president or congress is like the icing on the cake—it might look different, but the cake itself (your investments) is what really matters. Think of election outcomes as the new trends in fashion: they come and go, but a classic wardrobe (your diversified portfolio) never goes out of style.
In Summary
Election years bring a bit of drama, like the latest season of your favorite TV show, complete with plot twists and cliffhangers. So, when the political ads start running and the debates get heated, just remember: You’re not in the audience cheering for a candidate—you’re the director of your own financial future. With a solid, diversified investment strategy, you can enjoy the show without letting it derail your long-term goals.
Securities and advisory services offered through Cetera Advisors LLC, Member FINRA/SIPC, a broker/dealer and a Registered Investment Advisor. Wilde Wealth is under separate ownership from any other named entity. Please be advised trades cannot be accepted via email or voicemail. This article is designed to provide accurate and authoritative information on the subjects covered. It is not, however, intended to provide specific legal, tax, or other professional advice. For specific professional assistance, the services of an appropriate professional should be sought. A diversified portfolio does not assure a profit or protect against loss in a declining market. Past performance is not an indication or guarantee of future results.
