Next month, Americans will head to the polls to elect the next President of the United States.
While the outcome is unknown, one thing is for certain: We will see an endless parade of talking heads on TV trying to predict the impact of either candidate’s victory on the stock market. The trouble is that they can’t predict the winner, nor can they predict with any certainty what the effect will be.
LONG-TERM INVESTING: BULLS & BEARS ≠ DONKEYS & ELEPHANTS
Predictions about presidential elections and the stock market often focus on which party or candidate will be “better for the market” over the long run. Examining the data from nine decades and 15 presidencies (from Coolidge to Obama) reveals no obvious pattern of long-term stock market performance that can be reliably linked to which party holds the Oval Office. What the data do show are that markets provided substantial returns over those many decades regardless of who was elected:
Investing is a long-term endeavor. Trying to make investment decisions based upon the outcome of presidential elections is as unlikely to result in reliable returns as making investment decisions based on who won the last Super Bowl. At best, any positive outcome based on such a strategy will likely be the result of random luck. At worst, it can lead to costly mistakes.
At Focus Wealth Management, we remain steadfast in our belief that a broadly diversified, well-managed portfolio is both your best defense, and the best opportunity to tilt the odds in your favor.