Navigating Election Year Market Swings

Investors often grapple with the impact of political events on their portfolios, particularly during election years. 

The upcoming election may fuel fears of market volatility, prompting some investors to consider drastic actions.

However, it’s crucial to remember that investment decisions should be rooted in financial fundamentals rather than political biases. 

While political noise may create short-term market fluctuations, history suggests that long-term trends may remain positive.

In fact, S&P Total Returns by election year since 1976, shows 10 out of the past 12 election years have had positive results and 8 of those years had double-digit returns.*

2020:        18.40
2016:         11.96
2012:         16.00
2008:        -37.00
2004:        10.88
2000:        -9.10
1996:         22.96
1992:         7.62
1988:         16.61
1984:         6.27
1980:         32.42
1976:         23.84

Framing investment choices as ‘good vs. evil’ based on political affiliations may cloud judgment and lead to emotional decision-making. 

Advisors play a crucial role in guiding clients through these turbulent times, emphasizing the importance of staying focused on long-term financial goals.

By adopting a disciplined approach and focusing on fundamental principles, investors may navigate election-related volatility knowing they have a plan in place.

 

*Disclaimer

The S&P index returns start in 1926 when the index was first composed of 90 companies. The name of the index at that time was the Composite Index or S&P 90. In 1957 the index expanded to include the 500 components we now have today. The returns include both price returns and re-invested dividends.

Past performance does not guarantee future results.

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