Elect a Long-Term Portfolio View

Have you noticed more news articles striving to explain how different political candidates may impact market performance? Researchers investigate historical data and attempt to identify patterns that help project how markets may be impacted if specific people are voted into office.?Many of these articles cite different timelines and market indices, making it confusing and challenging to draw universally accepted conclusions.

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Recently an acquaintance asked me what changes my team was making to clients’ portfolios considering election day.?She initially was surprised when I said “None.”?And then she smiled and nodded knowingly when I elaborated, “We consider every day important as we manage our clients’ investments.”?

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The following are a few tips to keep in mind all the time, especially as the countdown to the election continues.?Curious whether your portfolio is (post-)election-ready? Let’s talk.

Focus Your Portfolio On You

While it may be interesting to see the connections that analysts draw between who is voted into office during different election cycles, all three branches of government (can) impact fiscal policy.?While the President introduces the budget and Congress passes laws to direct spending, the judicial branch can rule whether steps taken by the President and Congress are legitimate, or unconstitutional.?

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As a result, the combination of existing and emerging leaders in all three branches are on our investment team’s minds year-round.?We see the people in these roles, together, having the power to influence market performance through (new) policies they introduce, implement, and evaluate.

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Rather than initiating investment positions based solely on potential political outcomes or the fear of geopolitical events, our team designs customized portfolios for our clients based on their individual financial plans, tolerance for risk, and income needs.?While we consider the policies that may come out of Washington in portfolio construction and maintenance, we also incorporate other items.?These details include, but are not limited to, Fed decisions around interest rates, global activities, and business fundamental measures of value include free-cash-flow, revenue and earnings growth, and balance sheet quality.

Expect Volatility

During election cycles, markets often experience greater volatility.?Swings between highs and lows can be experienced in short periods of time, sometimes within hours of the same day.?

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We believe that this is because the markets dislike uncertainty.?When elections occur, it is possible that the individuals in office may be replaced by new people.?And if this happens, it is unclear how existing policies may change and what new legislation may be enacted.?Markets typically prefer continuity because change and new ways forward are unclear.

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We encourage our clients to expect this election “noise,” rather than being overwhelmed by it.?While the swings can be significant and disruptive, we anticipate that they are temporary.?Things will calm down and markets will stabilize once elected officials are confirmed.

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As part of proactively managing additional election-related volatility, be forward-focused when it comes to your cash requirements.?Clients and I routinely discuss how their lives and cash flows are changing, and how we’ll meet their (evolving) demands.?In addition to advising everyone to retain emergency savings, I utilize lower-risk accounts and shorter-term investment vehicles to assist individuals with paying for immediate goals and to ensure that people reliant on income from their portfolio meet their needs even as markets fluctuate.

Stick To Your Plan

Remember that when you have a comprehensive financial plan, you are uniquely positioned to navigate the inevitable uncertainties that life presents, including election cycle volatilities and outcomes.?When you align your spending, savings, investment, insurance, and debt decisions to an asset allocation that has a long-term view, you benefit from a consistent and coordinated wealth management strategy over time.?Your risks are deliberately diversified within and across the different pieces of your financial picture.?

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On a final note be careful about making changes to your financial plan when the market is moving quickly.?While the fear of loss can prompt some people to think about trying to take control by selling out of the market and seeking safety in cash, this can do more harm than good.?Thanks to J.P. Morgan, you can see in this illustration that some of the best performing days in the market occur close to the worst ones:

While our team does fine tune positions in clients’ portfolios to capitalize on dynamic market opportunities, we do so in line with their long-term plans.?As people are voted in and out of office, legislation changes, and new economic or market data emerge, we continuously assess whether adjustments to clients’ approaches are merited.?When changes make sense, we move forward with care and confidence.?If you’d value an independent fiduciary’s view on your current plan, know that I am here.

Caroline Wetzel is a CERTIFIED FINANCIAL PLANNER TM (CFP?) and Vice President, Private Wealth Advisor with Procyon Advisors LLC. Procyon Advisors, LLC is a registered investment advisor with the U.S. Securities and Exchange Commission (“SEC”).?This article is provided for informational purposes and may also include opinions and forward-looking statements which may not come to pass. Information is at a point in time and subject to change. Procyon Advisors, LLC does not provide tax or legal advice. https://www.procyonpartners.net/team/caroline-wetzel/