Welcome to the political season. While emotions and tensions typically run high during this time, we’ve been receiving questions about how this election season might impact the markets. My usual response is, “I DON’T KNOW.” However, what I do know is that you should separate your emotions about the election from your investment decisions. Investment decisions should be based on data and scientific evidence.
Most of the questions we receive are concerns about markets going down, not up, and what adjustments should be made. Interestingly, there have been 24 presidential elections since 1926. If we use the S&P 500 index as a measure of the market, it was negative in only four of those presidential election years. That means it was positive in 20 of those presidential election years.
In summary, while politics and elections do matter to the market, they are just one of many variables that have an impact, and they don’t appear to be a primary one, making them indistinguishable from any other variable. Therefore, it should not form the basis of making investment decisions.
Please contact us, here at Claris with any questions or concerns.
