There are lots of reasons that we shouldn’t mix up our portfolio over politics or let our politics overrule our investment disciplines. As an intro to our October 19th client event – here are 3 of them:
1. There is no evidence that markets prefer one party over another. History is filled with examples of markets advancing – regardless of who holds power.
2. The election is not the only thing going on. Almost anything has the potential to move markets in the short term. Current market volatility is more likely caused by congress NOT proving fiscal stimulus than it is about the presidential election.
3. Long-term rules of personal finance (the only rules that matter) haven’t changed. Volatility is normal, earnings estimates are on the rise, and the equity risk premium is high given the low low rates paid on cash and fixed income.
As long as you are using a plan-appropriate asset allocation and are already broadly and globally diversified, your best bet is probably to stay the course.
No one can predict. The best course of action is to remain planning driven and forever mindful of the limitations of our knowledge of the future.