Elections and Overreactions...

Posted by Valley Financial Group & Billy Wolfe Jr.

It is hard to believe, but the 2016 Presidential election is right around the corner, and no matter who you side with, Americans across the nation are all asking the same question, what effect does the outcome have on my financial assets. Despite TIME magazine’s claim that “both stocks and the bond market will plunge if Trump goes ahead with his plan to renegotiate the national debt” and that “if Clinton wins the White House she’ll cripple the economy by hiking the taxes by $1 trillion”, economists maintain that over time the election’s outcome will have no long term effect on your money.

While the election itself is irrelevant to your investment portfolio, the nation’s reaction to announcement of the new Commander-in-chief will. Often times, the biggest mistake investors make is choosing what they want now, as opposed to what they want most. Investors across the nation will either sell or buy depending on their own personal fears or biases towards a particular candidate’s policies, biases almost every American still holds despite consistent growth of the S&P 500, which has risen in almost 70% of years since 1926[AK1] (http://time.com/money/page/2016-presidential-election-clinton-trump-affect-finances/), a period in which a nearly even 8/7 split of Republican and Democratic presidents, respectively. The wisest thing you can do to help benefit your portfolio in regards to this year’s election is to not react to it. Investment advice or analysis that predicts a stocks rise or fall based the winning candidate should definitely be ignored, as stocks will rise over time more often than not regardless of who sits in the Oval Office. No matter your political beliefs and affiliations, it is best to keep your investment portfolio separate, especially with perhaps the most bitter and polarizing election in US history on the horizon. Keep your finances independent of your personal political agenda and don’t let a candidate’s plans and promises affect which stocks you believe will plummet or skyrocket. Your investment portfolio is constructed to help you pursue your long-term financial goals and navigate the market regardless of the political conditions, no matter if your voting sneakers sport a donkey or an elephant the morning of the 8th.

This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the readers as research or investment advice nor should it be construed as a recommendation to hold, purchase or sell a security. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested.
 [AK1]Time Magazine