How Are Your Investments Impacted by Current Events?

Investing

December 5, 2024

We are often asked how election results might impact a clients’ investments. They are concerned that if one party or the other wins an election, the economy and—by extension—their investments, will be adversely affected.

We recently came across a book titled Reasons Not to Worry; How to be Stoic in Chaotic Times by Brigid Delaney that did an excellent job of speaking to this point. Through her research on Stoicism, a philosophy over 2000 years old, she helps put these kinds of questions in perspective.

The Basic Stoicism Beliefs:

  1. Some things are in our control and others not.
  2. The more we value things outside our control, the less control we have.
  3. Work out first what you can control and place your efforts there.
  4. Don’t waste time and energy worrying about what you can’t control.
  5. The things you can control:
    1. Your character
    2. Your actions and reactions
    3. How you treat others

Of course, not focusing on things that are out of our control is easier said than done, especially with the news media and social media constantly bombarding us with things to worry about.

How Does Stoicism Apply to Elections and Investments?

While elections can create some short-term uncertainty, we have literally no control over the outcome and how the economy and investment markets will react. We must accept what we cannot control and focus on what we can, like our long-term investment goals and how our investments are managed.

The party occupying the White House and Congress is just one of many variables that influence investment performance. Generally, factors such as the direction of interest rates, unemployment trends, levels of consumer spending, wage changes, inflation, and corporate profits have a much greater impact.

According to analysis from YCharts research services, the average annual returns of the stock market since 1950, based on the party in the White House are:

  • Republican Presidents 2.79%
  • Democrat Presidents 5.15%
  • All Presidents 8.08%

JourneyTree puts a great deal of effort into evaluating investments that we believe are likely to provide a good return over time with only a modest amount of risk. Experience has taught us that, in all probability, this approach will be more successful than moving money in or out of the market based on which party is in office.

Our key message: stay invested in the investments that set you up for long-term success.

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