Archive for October 29th, 2024
Investment Insights: What If My Candidate Doesn’t Get Elected?
With the 2024 election looming just a few weeks away, it's difficult to tell which candidate will win. Both candidates have made firm statements regarding their economic plans and policies, and of course, these plans differ based on their parties and goals. But will these economic policies impact your investments one way or the other after someone takes office? What if your candidate doesn't get elected, and the other team's policies are put into play?
The good news is that, statistically, your investments are quite safe.
Investments Remain Steady Through Elections
20 of the last 24 election years have shown steady stock market performance no matter who was elected, Republican or Democrat. In these 20 election years, the S&P 500 continued to provide an average of 11% returns. Over the last century, Dow Jones has provided a steady average of 10% returns, regardless of who was in office.
The reality is that the momentum of the investment market is greater than the political fluctuations of government leadership. Smart investments from last year will likely stay strong, and political policies rarely have a significant impact on them.
The Fed Has the Most Economic Influence
Regarding the profitability of investments and overall economic performance, the Fed has far more influence than the president or their administration. When the president or their lawmaking team releases a new economic policy, the effects are often unpredictable and not as impactful as intended. For example, the Affordable Care Act did not reduce hiring capacity, and the Tax Cut and Jobs Act did not significantly change the business landscape.
However, Fed policy changes have clearly had a more profound impact. Tighter financial policies negatively impacted the first two years of the Trump presidency, while the Obama presidency saw economic growth due to generous interest rates.
This Year, the Focus Is On Taxes
What are the economic policies being discussed by candidates in the coming election? Both candidates focus primarily on taxes that might subtly shift the balance toward large or small corporations or affect the cost of living. Harris focuses on tax deductions for small businesses, while Trump has proposed reducing corporate taxes for domestic-producing companies. Neither system will likely have an overwhelming impact on the long-term viability of your stock portfolio.
Maintain Your Long-Term Investments
The most important thing to remember is that long-term investments provide the most significant advantage when you stick to your long-term strategy. Election years may bring turmoil in many ways, but who is in the White House rarely has a major influence on the long-term profitability of investments or the overall inertial growth of the business sector. If you have invested wisely, your investment strategy can and should remain unchanged. History has shown that those who stay the course consistently see greater returns than those who enter and leave markets with the political winds.
What If Your Candidate Doesn't Win?
Perhaps one candidate is proposing policies that could benefit your portfolio. Maybe the other candidate proposes policies that seem less favorable. We believe that your finances will likely remain steady and long-term strategies will retain their viability, no matter who is elected.
While short-term volatility often spikes around election periods, the market tends to stabilize as uncertainty fades. Instead of reacting emotionally to election results, staying focused on your long-term goals and a well-diversified portfolio is crucial. Elections come and go, but a solid financial strategy can weather any political shift.
Contact us today for solid financial advice to help you invest confidently through the election.
Any opinions are those of Dale Crossley and Evan Shear are not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions, or forecasts provided in the attached article will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including asset allocation and diversification.
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