Staying Surrounded During the Election
The election surrounds us like Waffle House hash browns: the news is smothered in daily coverage, it's scattered across social media, it's covered in conversations with friends, and chunked into family dinner time. The election is also the #1 topic on our client's minds right now. And for good reason. The stakes have never been higher as our country battles a recession, a pandemic, and racial inequality all at the same time. Emotions are high, sides are far apart, and tension is everywhere. JP Morgan's Chief Global Strategist, Dr. David Kelly exclaimed on a recent call, "We don't know who will win the election, and even if we did, we still wouldn't know how the market would react!"
When so much of the world feels out of your control, you look around your sphere of influence to find something you can control. Often times, that lands squarely on your portfolio. While you can't control who is elected or what the market will do, you can control whether your assets are in or out of the market. After surrounding yourself with election coverage, you look at your family and imagine the nest egg you built over decades of hard work being taken away by factors you can't control. It's no wonder the temptation to hit the eject button feels higher than ever.
We get it. We experience those same gut-check feelings about our personal nest eggs too. That's why we believe staying surrounded and supported by a financial team bringing objectivity, decades of experience and research, and an outcome-driven plan to the table is more critical now than ever.
No matter how savvy an investor might be, it is nearly impossible to be objective about your own money. There is too much unique history and personal experience tied in to each one our stories to make objective personal money decisions during highly reaction-inducing times such as these. Our goal at Sailer Financial is to surround you with a team of experts, build a plan to reach your financial independence, and execute that plan in your portfolio with the long-term desired outcome serving as our True North. This means making decisions not only for today, but for decades to come. We then must stay invested through market volatility like March and uncertain events like the election to realize those outcomes and growth potential that the stock market can bring. Yet, we must balance that level of risk so we can still sleep peacefully at night.
As Dimensional Fund Advisors (DFA) shows in the chart below, the long term trajectory of the market has been up and to the right, regardless of which administration has been in office. And Vanguard backs that up. Since 1860, there have been 65 periods of a Democratic president and 94 periods of a Republican president. Vanguard found annual compound returns in a balanced portfolio during a Democratic president to be 8.4%. And for a Republican president: 8.2%.
DFA says it best:
Shareholders are investing in companies, not a political party. And companies focus on serving their customers and growing their businesses, regardless of who is in the White House. US presidents may have an impact on market returns, but so do hundreds, if not thousands, of other factors - the actions of foreign leaders, a global pandemic, interest rate changes, rising and falling oil prices, and technological advances, just to name a few. Stocks have rewarded disciplined investors for decades, through Democratic and Republican presidencies. It's an important lesson on the benefits of a long-term investment approach.
This election isn't the first time we've spoken about highly tense and emotional geopolitical events. And it certainly won't be the last. While the economic conditions, country's health, and current events look different now than they did in past elections, taking an objective approach to financial planning and investing still stands today. To quote Jeremy Hutzel's 2016 words directly, "But we will always remain optimistic about a nation that celebrates the individualism and efforts of its citizenry. Politics are a distraction from what drives the economy, and certainly a distraction from the future we build for ourselves. At Sailer Financial, we are here to focus on the outcome: your financial independence and security." I highly recommend you read Jeremy's 2016 election article HERE.
If you or someone you know is feeling concerned about their financial well-being through these uncertain times, let's schedule time to talk. It's how we love to listen and support our clients today and for all the uncertain elections to come.
Andy Michael, CFA
Portfolio Manager
