The presidential election is little more than a month away. Like all elections, this one has generated considerable interest, and, as a citizen, you may well be following it closely. But as an investor, how much should you be concerned about the outcome?
Probably not as much as you might think. Historically, the financial markets have done well — and done poorly — under both Democratic and Republican administrations. Also, many factors affecting investment performance have little or nothing to do with the occupant of the White House. Consequently, no one can claim, with any certainty, that one candidate is going to be “better for the markets” than another one.
Still, this isn’t to say that any given presidential administration will have no effect at all on investors. For example, a president could propose changes to the laws governing investments, and if Congress passes those laws, investors could be affected.
But in looking at the broader picture, there’s not much evidence that a particular president is going to affect the overall return of your investment portfolio. As mentioned above, many factors — corporate earnings, interest rates, foreign affairs, even natural disasters — can and will influence the financial markets. But in evaluating a president’s potential effect on your investments, you also need to consider something else: Our political system does not readily accommodate radical restructuring of any kind. So it’s difficult for any president to implement huge policy shifts — and that’s actually good for the financial markets, which, by their nature, dislike uncertainty, chaos and big changes.
The bottom line? From your viewpoint as an investor, don’t worry too much about what happens in November. Instead, follow these investment strategies:
Elections — and even presidents — come and go. But when you “vote” for solid investment moves, you can help yourself make progress toward your financial goals.
This article was provided by Edward Jones Financial Advisor Iain Marshall. For more information call Iain at (530) 676-5402.