How Elections (pretty much don't) Affect the Stock Market

Rational people understand that stock market performance will be based on sound economic fundamentals such as corporate earnings, interest rates, inflation, and GDP.

Irrational people believe the opposite: that political agendas, campaign promises and hypothetical policies will.

We want to set the record straight: There’s a mountain of evidence going back to 1950 that proves that presidential elections have had very little impact on the market. In fact, the data suggest that more volatility happens in the year leading up to presidential elections than it does after the elections. To us, that’s a clear sign that a decent percentage of investors are using emotions and personal agendas in planning for something that will likely never happen.

We hate to break it to you: There are huge discrepancies between ideas pitched on the campaign trail and actual policy changes that take place after election day. With that in mind, why would investors continue to make decisions now based on future hypotheticals? (Pssst…remember that 2nd line about irrational people?)

Of course policy changes happen. But they happen in both directions. So it’s crucial that you come to terms with this, set aside politics, and focus on what’s most important: the long-term financial well-being of you and your family.

If you need a rational voice to help you out, contact us for a free consultation.

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