It’s election season, which means the bumper sticker battles are in full swing. Usually, bumper stickers on cars highlight whom the driver supports. I say usually because while driving in Roswell recently, I saw one that was apparently trying to make a statement about the 2016 election. Rather than declaring support for Donald Trump or Hillary Clinton, this clever, patriotic, red, white and blue sticker simply said “2016 – We’re Screwed!” I’m sure many of you can relate to that sentiment.
A common theme I hear from many folks around town related to this presidential election is that they’re not very excited about either of the main party candidates and they’re worried about what will happen regardless of which one is elected. How will the economy and stock market react to a President Trump or President Clinton? This leads to questions about whether we should be doing anything with our investments in advance of the election.
The most recent political vote that caused concern was Great Britain’s “Brexit”. Remember that? Before the vote on June 23rd, most experts thought that the “Remain” vote would win. The markets had a positive view on that position. Lo and behold the markets crashed when the “Leave” vote prevailed, because this crash assumed some type of economic decline for Europe. But within weeks Britain’s top share index, the FTSE 100, hit 11-month highs, and by mid-July, the US S&P 500 and Dow Jones Industrial Average had also risen to record highs. That’s quite a turn around in a short amount of time.
Here in the U.S. the presidential election hyperbole is in full swing, but let’s take a look at the long term results after past elections. Since 1936 there have been 18 presidential elections, and according to American Funds “A Review of U.S. Presidential Elections” the S&P 500 was higher 10 years later 17 out of 18 times. On average, a $10,000 investment grew to $30,263 (or triple the original value). The one period that was a loss was 2000-2009 which included 9/11 and two recessions; the so-called “lost decade”. And maybe most pertinent, it didn’t really matter whether the president had a D or R after their name. The average ending value was similar when comparing the 9 Democrats to the 9 Republicans.
From these examples you can see why a long-term strategy is prudent. Getting caught up in the moment can lead to unnecessary panic, which normally is unwarranted. Focus on the things you can control such as good spending and savings habits, not borrowing too much, and diversifying your investments. Soon the election will be over and normal life can resume. Until then remember––life’s a journey, navigate it wisely!