Separating Politics from Your Portfolio

This election cycle has been particularly volatile, and it’s difficult to not let strong political preferences intercede in investment decisions. While an extreme position would be to consider getting out of the market entirely if the other side is in power that would also be a poor choice. History tells us remaining invested is better, and the individual in the White House doesn’t have as great an impact on the economy as you may think.

The market trends upward no matter who is in charge

From the following chart, every combination of White House and Congress control results in a positive S&P return. It may be counter-intuitive to many, but, historically, the numbers remain strong with a divided government. 

Every presidential term sees a market decline

Although the overall trend is positive, every President sees a downward period in his administration. This is true even for those whose term in office saw large cumulative gains, like Clinton and Obama.  

Don’t play politics with your portfolio

While specific actions taken by those in charge will have an impact on investment decisions, such as an increase in the capital gains tax rate for example, trying to anticipate government actions in advance is unlikely to be successful. No matter who is in Washington, you should follow a long-range plan based on your specific need, make changes for the right reasons and avoid emotional, knee-jerk decisions. Spinnaker can help you craft a plan specifically for your needs. Contact us today.

 

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