With election season upon us, I thought it would be worthwhile to share my thoughts on using your political lens for investment purposes. In a word, DON’T!
Has It Always Been So Hostile?
Yes. Our political system has frequently been dysfunctional and filled with personal attacks. Remember when Aaron Burr shot Alexander Hamilton? Or when Thomas Jefferson advertised that John Adams was busy importing mistresses and that he had a “hideous hermaphroditical character”? Whoa – that’s rough stuff!
Does The Market Care About Approval Ratings?
It appears not. Since Kennedy was elected, the sitting president has been viewed unfavorably by more than HALF the country 45% of the time. Over the last 55 years, the markets have done the best when the president’s approval rating polled between 35% -50%. It seems like the market expects it at this point.
Can Political Issues Hurt a Portfolio?
Sure. No one really discusses the adverse condition of the German stock market in the 1930s and 1940s or the Russian stock market under Stalin. Yet, the reality is that there are just way too many variables that the market considers.
Does the market perform better when we’re unified?
Ironically, no. Historically, the markets do better with a divided government than a unified one. When I read that, my mouth dropped. If we look more recently, if you didn’t invest because you disliked Obama or Trump – you missed about 14% average returns during their respective terms (as of this writing).
In conclusion, some doomsayers will say it’s time to implement the 3 G’s plan: Gold, Guns, and Get Out of Dodge! But we don’t recommend that course of action. We believe avoiding letting your political views affect your investment decisions is wise. My clients know we are disciplined investors with a clear strategy—for our entire lifetime. Most of this won’t matter over a 30-plus-year retirement … so it is best not to worry about this.
Sources
Invesco Compelling Wealth Management Conversations 2018 (formerly Oppenheimer)
Dave’s Picks
Red Hot Chili Peppers – Californication (Official Music Video)
Timbaland – Give It To Me ft. Justin Timberlake – Choreography by Willdabeast & Tobias Ellehammer
Crazy, Stupid, Love. Official Trailer #1 – (2011) HD