Whoever thought it was a good idea to have an election during a pandemic year really messed that one up! Here are some insights, and what we are focusing on.
The market has just printed a new all-time high since recovering from the Covid19 correction this spring. Now all eyes are turning to the impending election in early November. Rest assured that our eyes are on this event as well, and that we are always diligently pursuing the best course of action. However, sometimes no action is better than over managing. A brief study into the history of market returns before, during, and after elections will provide some insight to our upcoming election. Take a look at the chart below provided by First Trust, along with this Forbes article.
As we digest this information, we conclude that financial markets find a way to grow in the midst of election cycles. Company's focus on solving problems consumers face, and providing value to that consumer regardless of which party occupies the White House. Both Biden and Trump would operate under a system of checks and balances, which ensures that capitalism prevails. Historically the stock market will pick its trend regardless of who is President.
While we do feel that some volatility will return to the markets during and shortly after the election results, we feel you should stick to your investments, unless your risk and objectives have changed for your account. If your risk tolerance has changed, then it would make sense to attempt to decrease the volatility that your account may experience. As always we want to reassure our clients that we will make our best efforts to manage their account well through this election. If you would like to discuss anything in further detail, we welcome speaking with you.