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the right way to invest blog

the election and its impact on your retirement

12/13/2017

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"Over the long run, the market has provided substantial returns regardless of who controlled the executive branch.”
 
There’s a common sentiment that comes around in the summer and fall every 4 years and it’s ‘I’ll wait to see what happens with the election before I do anything.’  The problem with this thinking is the market never tells you when something is about to happen, moreover, it never tells you when it’s about to take off or drop like a rock.  No matter who wins, the immediate outcome will be one of three scenarios: 1) the market will go up, 2) the market will go down, or 3) the market won’t go up or down.  My job is to make you ignore the short-term movements of the market (which are entirely random and fall into one of the three above scenarios), instead, I want you to focus on the long-term movements of the market, which always fall into scenario one above.  And that is why it is imperative we remain invested every single day, doing so over the not so important short-term means we’ll participate in all three scenarios, but over the extremely important long-term ensures we’ll participate in the only market scenario: scenario one.
 
Below is neat graph and sound conclusion taken from this DFA article:
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CONCLUSION Equity markets can help investors grow their assets, but investing is a long-term endeavor. Trying to make investment decisions based upon the outcome of presidential elections is unlikely to result in reliable excess returns for investors. At best, any positive outcome based on such a strategy will likely be the result of random luck. At worst, it can lead to costly mistakes. Accordingly, there is a strong case for investors to rely on patience and portfolio structure, rather than trying to outguess the market, in order to pursue investment returns.

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    Michael Pensinger, CFP® is Owner and President of Pensinger Financial, Inc.

    He grew up in Park Forest, Illinois and now resides in Lemont, Illinois with his wife, two children, and two dogs. Michael is actively involved in his community; coaching kids' sports, having served as Treasurer for the Lemont Area Chamber of Commerce Board of Directors, sitting on the Board of Directors for Hope & Friendship Foundation, and volunteering for the Lemont Heritage Woodland Sanctuary Open Space Committee. Read More

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