With the upcoming presidential election just over three months away, the rhetoric is sure to ramp up. Whatever side of the aisle you reside on, you are bound to have concerns about the incoming president and the effect on the economy. However, making financial decisions based on your political views or election expectations can be detrimental to your long-term investment success.
As the chart below indicates, trying to make investment decisions based upon the outcome of presidential elections is unlikely to result in reliable excess returns for investors. At best, any positive outcome based on such a strategy will likely be the result of random luck. At worst, it can lead to costly mistakes. Accordingly, there is a strong case for investors to rely on patience and portfolio structure, rather than trying to outguess the market to pursue investment returns.
At Soundmark we continue to stress the importance of a well-structured and diversified portfolio in conjunction with a long-term financial plan. We firmly believe that is the best course during these challenging and turbulent times.