With the presidential election just a few weeks away, the public is naturally interested in not just the outcome but what the results will mean for issues of national importance. As a citizen, you likely share these concerns — but how about as an investor? After the votes are counted — or even before — should you make some moves in anticipation of possible changes in policy?
Let’s look at the big picture first, through the lens of history. The financial markets have performed well — and at times, not so well — under Democratic and Republican presidents alike. And the same is true about which party controlled Congress. While it might be an overstatement to say that decisions made in Washington have no effect on the markets, it’s not always so easy to draw a direct line between what happens there and how the markets perform. For one thing, political candidates often make promises that are not fulfilled, or, if they are, have different results than intended. Also, other institutions can have a significant impact on the markets. For example, the Federal Reserve, which controls short-term interest rates, can certainly affect many market sectors. And there will always be external events, such as foreign conflicts and even natural disasters, that can make short-term impacts on the investment world.
So, rather than making changes to your portfolio in anticipation of what might happen if certain candidates get elected, or even in response to actual policy changes, look to other factors to drive your investment decisions.
