As we find ourselves in the middle of another election season, it's easy to feel overwhelmed by the uncertainty of our political future. Social media and news outlets are often filled with negativity, and even friendly gatherings can become battlegrounds for political debate. However, amidst this chaos, there is good news: your money generally doesn't care about politics.
Historical data supports the idea that investment performance isn't dictated by election outcomes. Below is a chart that shows the returns of the US Stock market and US bond markets in the periods following the last 11 presidential elections.
Remember, past performance is no guarantee of future results. However, understanding this historical context can help reduce the fear and trepidation you might feel during this election cycle. There may be some short-term volatility surrounding the election, but historically we find that it is purely coincidental. Moreso, it may even be volatility due to the normal market swings, but the media is always looking for a scapegoat on which to point blame.
Sound investment strategies focus on aligning your investment portfolio with your long-term financial goals and risk profile. And then, finding opportunities within those parameters regardless of the geopolitical and economic environment.
Stay informed, stay calm, and remember that your chances of successfully navigating any market cycle, even an election cycle, may improve if you have a plan and strategy to pursue your goals.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
The Russell 1000 Index consists of the 1,000 largest securities in the Russell 3000 Index, which represents approximately 90% of the total market capitalization of the Russell 3000 Index. It is a large-cap, market-oriented index and is highly correlated with the S&P 500 Index.
The Bloomberg U.S. Aggregate Bond Index is an index of the U.S. investment-grade fixed-rate bond market, including both government and corporate bonds.