Election 2020: A Dose of Patience

In fact, 45% of consumers with $100,000 or more investable assets expect to make changes to their portfolio due to the upcoming 2020 presidential election.¹

But if history is any guide, patience may be the answer.

What History Tells Us After Elections

For the past 12 presidential elections, the Standard & Poor’s 500 index has notched a 4% gain, on average, in the 90 days after the election.²

Of course, past performance does not guarantee results. And there have been some notable exceptions to the trend. In 2008, for example, the S&P 500 dropped more than 10% in the three months following the election as the global financial crisis gripped the markets. And in 2000, the S&P 500 fell 4.1% from election day until December 12, when the Supreme Court ruled on the election between George Bush and Al Gore.²

Let Your Goals Guide Your Decisions

Investing involves risks, and your goals, time horizon, and risk tolerance should be what drives any changes to your portfolio strategy. If you’re concerned that the upcoming election may change one of these critical factors, perhaps it’s time to review your investment approach. For retirement-focused investors, reviewing your income plan is also helpful. Check out Financial Advice for Retirement Planning for Florida Retirees.

Patience Remains a Powerful Strategy

When uncertainty rises, patience often becomes your strongest tool. In fact, legendary investor Warren Buffett once said, “The stock market is a device for transferring money from the impatient to the patient.”³ So as Election 2020 unfolds, stay calm, stay focused, and stay committed to your strategy.

FAQ:

1. How does the presidential election affect the stock market?

Presidential elections can create short-term market volatility due to uncertainty about policies. Historically, markets may dip immediately after the election but often recover within a few months.

2. Should I change my investment strategy because of Election 2020?

Not necessarily. Your investment decisions should be based on your goals, risk tolerance, and time horizon. Sudden changes due to election outcomes may harm long-term growth.

3. What happened to the S&P 500 after past elections?

Over the past 12 presidential elections, the S&P 500 gained an average of 4% in the 90 days following the election. However, exceptions exist, like in 2000 and 2008, when the index dropped due to extraordinary circumstances.

4. Is patience a good strategy during election years?

Yes. Legendary investors like Warren Buffett emphasize that long-term patience often beats short-term reactions. Staying invested during volatility can help your portfolio recover and grow.

5. How can I prepare my portfolio for market uncertainty?

Review your goals, diversify your investments, and avoid impulsive decisions based on news or polls. Consider consulting a financial advisor to align your strategy with your long-term objectives.

6. Are there specific sectors that perform better after elections?

Performance varies depending on the winning party’s policies. Historically, technology, healthcare, and consumer staples have shown resilience, but sector performance can change with each election cycle.

7. Can I benefit from market dips after the election?

Opportunities may arise, but timing the market is risky. A disciplined, long-term approach usually delivers better results than attempting to predict short-term swings.

^{2. HartfordFunds, 2020}

^{3. Pinterest.com, 2020}

^{The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite, LLC, is not affiliated with the named representative, broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.}