“If you mix politics with your investment decision making, you are making a big mistake” -Warren Buffet

This November will mark the sixth presidential election where I have been making recommendations to clients on their investments (missing the 7^th by only a few months).   Each time, I field phone calls from clients on both sides of the aisle claiming if the other side wins that it will be the end of our economy and we will go into a deep recession.

While admittedly, the intensity of this election seems to be higher than most, the same basic tenant holds true; there is no conclusive evidence that a democratic or republican president offers better returns in your portfolio.  

In fact, your lifetime goals have spanned many prior elections and will survive many elections to come.   While past performance isn’t a guarantee of future results, let’s look at a little historical reference of how the market has fared.  Of the past 19 presidential elections (since 1936), if you invested $10,000 at the beginning of the election year, ten years later you had more money.   With 15 of those 19 elections, your money more than doubled in the next 10 years.¹

Let me offer a few other nuggets that might be helpful.   Some of which were touched on in a recent Nick Murray article³.

Regardless of who gets elected, the best companies in the world will continue to evolve and thrive for the benefit of their shareholders.

Look at how many companies have changed in the last 8 months through the pandemic.   The world changed and they adjusted their business model to find ways to be profitable.   If a new president offers new taxes or tariffs are any new punitive change that would suppress business; those companies will find other avenues to derive profit.   Innovation and ingenuity are rewarded in the stock market.   The best companies will find a way to do that.

If the change is too drastic, we’ll have another say in November 2022 (23 months).

The entire House of Representatives and one-third of the Senate comes up for re-election in November 2022.  If the president or the Congress have gone too far in one direction in that time, we’ll have a significant opportunity to help them course correct.  

You cannot predict the stock market around the election, much less time the market. 

As recently as the last election, when it appeared a Trump victory appeared more likely, the stock market futures were down 5% in premarket trading, triggering a circuit breaker to halt trading.   By the time the market closed the day after the election, the market was up 1%.²

Many people around this time convince themselves that it would be a good idea to get out of the market until the election is over and then get back in.   The premise, I suppose, is that the market will go down between now and then and you will then be able to purchase the same stuff at a lower price after the election.   Setting aside any taxes incurred for that move, there is no basis in the argument of that being the track of the market performance leading up to and through an election.   

When you dramatically change your portfolio based on current events and not based on your plan, you are no longer investing.  You are gambling.  And the tough thing, when you go down that rabbit hole, is that what you “emotionally” think is right is very often “financially” wrong.  For example, how were you feeling around March 23^rd this year?   Were you thinking it was the beginning of the greatest bull market in history?  Neither did I—until it happened…

Thank you, as always, for being clients of Moxie.   We don’t take lightly the trust you place in us.   Please do not hesitate to reach out of you would like to discuss any details of your specific situation. 

Best Regards,

Joe and the Moxie Team

¹ American Funds, A Review of Presidential Elections

² Here’s How the Stock Market has Performed Before, During, and After a Presidential Election, Forbes, Aug 18, 2020

³ Nick Murray Interactive, October 2020

Joe is a registered representative and investment advisor representative of Cetera Advisor Networks LLC.

This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results.  This information should not be relied upon by the reader as research or investment advice regarding any funds or stocks in particular, nor should it be construed as a recommendation to purchase or sell a security.  Past performance is no guarantee of future results.  Investments will fluctuate and when redeemed may be worth more or less than when originally invested.  3289905/DOFU 10-2020