Should I be Worried about the Upcoming US Election?

Over the years, I have been asked how US election results might impact portfolio returns.  For some reason, I was asked this question much more frequently about three years ago… 

As we approach the US presidential election next November, investors may be worried about a contentious election season and an uncertain outcome that could impact the US economy and create extra market volatility.

If we look back historically, presidential elections have made very little difference when it comes to long-term returns.  What has mattered the most is staying invested.  If we look at election results right back to 1932, US stocks have trended upward regardless of whether a Republican or a Democrat became President.  The heightened volatility during the US Primaries (as shown in the below graph), has been more than offset by remaining invested for 1 year after.

Election-related volatility can produce opportunities in certain sectors (e.g. Pharmaceutical stocks have recently come under pressure amid political criticism of private sector health insurance).  Fund managers will monitor the risks and opportunities and may make changes to their portfolios based on their research and analysis.  Although short-term market fluctuations are frustrating when markets turn negative, the long-term performance of your portfolio is much more important in helping achieve your longer-term goals and objectives.  Long-term equity returns are determined by the underlying value of individual companies or businesses over time, not based on the latest news of the day.  Remaining invested based on your personalized investment plan has proven to be the best strategy over time.






Jon Knutson is a financial advisor with RGF Integrated Wealth Management Ltd. The views expressed are those of the author and not necessarily those of RGF Integrated Wealth Management Ltd., which makes no representations as to their completeness or accuracy.

©2019 RGF Integrated Wealth Management Ltd. | RGF Wealth Management Ltd., Member - Canadian Investor Protection Fund.

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