Return to Blog

The election and your portfolio

The first half of 2020 felt particularly unstable and unpredictable with the pandemic, protests, hurricanes and wildfires. As we move further into the fall, the fact that 2020 is also an election year may give rise to a new set of concerns. During the coming weeks, the presidential campaigns will only increase in momentum as they prepare for November and investors might be wondering how to prepare as well.

The months surrounding major elections are typically thought to be times of heightened market volatility. This is understandable as the news and social media outlets tend to highlight the differences in each candidate’s vision for the future of the economy, therefore it would seem that the uncertainty and potential for change in policies would result in major fluctuations in the market.

However, a new report from Vanguard reveals that there is no major increase in market instability during election years compared to non-election years. The study shows that although elections are major events for the country, “their impact on market returns has historically proven to be negligible, as shown in the chart below.”

annual nominal return

Vanguard’s report then focuses specifically on the time period immediately surrounding presidential elections. The data reveals that although investors may expect market instability, in actuality, the opposite has been true. "From January 1, 1964, to December 31, 2019, the Standard & Poor’s 500 Index’s annualized volatility was 13.8% in the 100 days both before and after a presidential election, which was lower than the 15.7% annualized volatility for the full time period.” In other words, markets tend to ignore elections.

elections

 

 

 

 

 

 

 

 

 

 

The thought of going through an election during an already tempestuous year may raise some concerns, however, the report out of Vanguard is clear that, “Elections are another one of those events that generate lots of headlines but that should not sway you from following the financial plan [you and your advisor] created. It’s understandable to have concerns about the election. But as far as your portfolio and the markets are concerned, history suggests it will be a nonissue.”

This does not mean that the markets won’t be volatile, it just means you have to stay focused on the months ahead, and not make irrational decisions in an irrational market.

 

Wiser Wealth Management, Inc. is a registered investment adviser. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.

Happy Birthday to Kylie, our Marketing Assistant! Kylie works hard behind the scenes on our website, podcast, social media, and so much more.

Meet Daphne, our Financial Planning Intern. She is studying Finance at The University of Georgia. We are excited she's joined us for the summer!

https://conta.cc/3Ov1Fub

Your Medicare premium is affected based on which tax bracket you fall within after age 63. IRMAA is your income-related monthly adjustment amount. Watch today's video to learn more about how IRMAA works.

https://conta.cc/3zK9WGw #irmaa #medicare

The big question is, will we have a recession in 2022? Watch this video to find out!

https://conta.cc/3Mz2z7D #recession2022 #recession
https://youtu.be/45TvHaZf4z4#recession2022

Happy birthday to LJ our Video Production Manager! LJ works behind the scenes producing all of our podcasts and videos that we post every week. 🎉

Company

Services

Client Access

Firm Information

Schedule a Meeting
678-905-4450[email protected]
Google Rating
5.0
Based on 71 reviews
js_loader