With the 2020 presidential election on the horizon, many investors are wondering what the results will mean for the financial markets.
Eric Stein of East Bay Financial Services, the chief investment strategist for Four Ponds Financial Planning, discusses how the election outcome may affect financial issues such as Social Security and tax policy and why you should avoid making rash investment decisions based on political leanings.
Eric reviews predictions made about the 2016 election and how the results differed. We believe you should not let your political leanings impact your financial decisions, and Eric provides evidence to back it up. He dives into political party sentiment on the economy over time, annualized returns during past presidential terms and the impact of staying invested at all times rather than when your preferred political party holds the White House.
Our strong preference is to stay invested rather than try to time the markets. When you time the markets, you have to be right twice: Once on the way out of the markets and then again on the way back in.
The reality is we don’t know anyone who can do this consistently. The markets are made up of public companies that are required to make decisions that are in the best interest of its shareholders. So whether there are currency crises, changes in tariffs, changes in tax policy, or some other event, the leadership of these companies adapt to their environment and do what is necessary to build capital for their shareholders.
It is our view that even if you have a strong personal view on politics (as some of us do here), we would caution against making major changes to your portfolio, unless dictated by your financial planning needs.
Eric Stein, CFA
Eric Stein of East Bay Financial Services serves as the chief investment strategist for Four Ponds. His experience includes serving as a vice president at Goldman Sachs Asset Management and chief investment officer for RSM U.S. Wealth Management.