In the coming weeks we will go through a hyper-partisan presidential election. We keep hearing from clients and prospects that “this time is different”.

We disagree.

No matter who gets elected, superior companies will continue to grow by acting in their shareholders’ best interests.

Shareholders are investing in companies, not a political parties. And companies focus on serving their customers and growing their businesses, regardless of who is in the White House.

We sleep very well at night knowing that fact.

Here is a great visual about what history tells us about US presidential elections and the market (special thanks to Dimensional).

elections and the stock market investors politics financial planning advisor wh cornerstone
We caution you to not make decisions based on the upcoming events. Humans are not very good at predicting the future. 

Case in point:
 

  • If an investor had invested $10,000 starting in 1900, but only had it in the Dow when Republicans were president, it would now be worth nearly $99k.
  • On the other hand, that same $10,000 would have grown to nearly $430k if it was invested only when Democrats were president.
  • That same $10,000 in 1900 would have grown to more than $4.2 million if the investor had remained in the market the entire time, regardless of which party has presidential power.*

In addition, no matter who is President in January, and no matter what policies are implemented, we get to vote for change in two years.

In 2022, the entire House of Representatives and a third of the Senate will have to face the voters again. And if the President or the Congress—or both—have gone too far in one direction, they’ll get voted out.

That we can guarantee. Our right to vote, and our balanced government has made the United States the most successful and longest-lasting democracy in history.

Take a look at this chart of the $88 trillion world economy by Visual Capitalist (they have the coolest charts).

the world economy in one chart politics investors elections and the stock market

The United States has less than 5% of world’s population but it produces close to 25% of Global GDP. Our system of capitalism makes America great.

Again, superior companies will continue to grow by acting in their shareholders’ best interests.

We recognize that these continue to be uncertain times.

Let us help you plan what you CAN control.

As always, we are here to talk any and all of these issues through with you; that’s our job. 

Give us a call at 888.797.9009, fill out our contact form, or schedule a call to touch base if you want to discuss the above message or anything else!

*Source:  Charles Schwab, Bloomberg, as of 10/2/2020. For illustrative purposes only.  A hypothetical portfolio value would be if a hypothetical investor invested $10,000 in a portfolio that tracks the Dow Jones Industrial Average on 1/1/1900 under three different scenarios: a Republican presidential administration; a Democratic presidential administration; or staying invested in the market throughout the entire period noted. It does not reflect effects of fees, expenses or taxes.

Recent Posts