An Election Year…What Should I Do?

Virtus Wealth financial advisors > An Election Year…What Should I Do?

by | Oct 1, 2020

In my years of experience in the financial world, I would always get this question, and my response has always been respectful. With a look of puzzlement, my answer was another question “do about what?” and yes, I knew what they were asking. I also knew in reality, they probably already made up their mind about what they wanted to do. They were looking for an accomplice, and not necessarily my advice.

I remember a quote from way back that goes like this “man (the generic for human, not sexist) learns from history, that man does not learn from history.” I wonder how many people from school children through adults actually study history. If they did, they would be familiar with how and why various empires failed after 200 to 250 years. How some forms of government suppress their constituents while others allow their people freedom to develop to whatever level they may choose.

So here we are at another election cycle and what should we do?  Cash? Stocks? Bonds? Real estate? Gold? Move to another country? Buy a cow, chickens, couple of pigs and couple acres of land, plant some veggies and get a .45 to keep anyone from taking it from us?  Go easy now!

History has shown a few things, just maybe we can learn from. I will share the following:    

1) The presidential cycle suggests markets perform better the last two years and best in the third year.

2) In the last eight presidential elections, large cap stocks tended to do better on average after an election.

3) Elections may not predict the stock market, but the stock market may predict an election.

4) A Democrat or Republican in the white house? Normal variations in the stock market returns dwarf any difference, from an investing standpoint, which party is in the white house.

5) Divided or united government?  Various combinations of Senate, House and White House may show some historically to be better than others. The thing to remember in all cases our country economically continued to function and when it didn’t go well, we recovered.

The United States of America is a Republic, which means we are a government of the people, by the people and for the people. Depending on how we the people vote, every two or four years, determines how we will be governed. Investing will certainly have its moments of ups and downs, but certainly history has shown us more ups than downs. That certainly does not predict the future, but maybe, just maybe, man can learn from history. We’ll see.

Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All investing involves risk including loss of principal. No strategy assures success or protects against loss. Past performance is no guarantee of future results. 

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