In this episode, we explore the relationship between U.S. presidential elections and market performance, tackling the common question: Does the political party in power really impact your investments? Many clients and investors express concerns about how the market will react depending on who wins, but we dive into the data and show that it’s not so much who’s elected, but rather the uncertainty leading up to elections that causes the most market volatility. While both Republican and Democratic presidencies have had different levels of market success, the overall takeaway is that long-term investing tends to outperform any attempts to time the market based on political events.
We also discuss how businesses, which drive market performance, care more about economic stability than which party is in power. Interestingly, markets tend to do better when Congress is divided, as it provides more stability and less drastic policy changes. The main takeaway we want you to have is this: rather than getting caught up in the short-term noise of politics, it’s more beneficial to stay focused on your long-term investment goals and reduce volatility where possible. Whether it's a presidential election or another major event, staying the course in the market tends to deliver better outcomes in the long run.
Connect with our Hosts:
Adrian’s LinkedIn:
https://ca.linkedin.com/in/adrianblake1
Trevor’s LinkedIn:
https://ca.linkedin.com/in/millerwealthmanagement
Connect with Cherry Hill Private Wealth, a trade name of Harbourfront Wealth Management Inc.
https://www.cherryhillprivatewealth.ca/https://www.harbourfrontwealth.com
Timestamps:
00:00 – Introduction: Overview of the episode topic and comparing market performance under Republican vs. Democratic presidencies.
02:06 – Market volatility and elections: Discussion on how elections cause anxiety and market volatility, and how clients react to political uncertainty.
04:42 – The VIX index and uncertainty: Exploring the spike in market volatility leading up to elections and how markets calm after the results are known.
06:04 – The real influence on markets: The importance of election outcomes rather than which party or president is in power, and how historical market data reflects this.
09:03 – Timing the market vs. time in the market: Discussion on the dangers of trying to time the market based on political outcomes and the power of compounding over time.
12:26 – Business resilience vs. politics: How major companies like Apple and Nvidia are less impacted by politics and more by overall economic conditions.
14:23 – Compounding and volatility management: The critical role of compounding in investment growth and strategies to reduce volatility during uncertain periods.
18:14 – Final takeaways: Avoid letting political events drive investment decisions; focus on long-term goals and reduce volatility where possible.
Let’s schedule a call to meet each other and see if we can help you achieve a financial roadmap that helps you create a financial plan that focuses on what, and whom, means the most to you. Book a consultation call here.
