An Election-Free Investment Strategy

Election and stock markets

Please note the publish date of this blog. Financial information, market conditions, and other data mentioned in this post may no longer be accurate or relevant.

This time it’s different. Sir John Templeton once said that those might be the four most expensive words in the English language. And here we are again – just like it happened in 2012, some friends and clients have asked me if they should move their investments to cash out of fear that an undesirable presidential candidate might win. The short answer… No.

Should you alter your investment strategy before election day?

I have some personal concerns about how the election’s outcome might impact America from a social and environmental standpoint, and I’m struggling to separate my feelings from what I’m actually invested in. But, I remind myself that I’m not invested in Trump, Clinton, or Wall Street. I am invested in innovation, businesses, land, buildings, etc.

Ultimately, while my fears are real, my experience and training reminds me that neither candidate is likely to have a long-term negative consequence on the world economy. If the market sees that the election is tipping towards an undesirable candidate, it will respond quickly. It might drop or it might rise, and if I could predict which one would happen and when, I’d be writing this blog from my private yacht.

To successfully speculate on an economic event and the impact it would have on my investments, I’d have quite a challenge in front of me:

  1. I’d have to sell before Wall Street decides who is going to win.
  2. The markets have to actually drop to validate my decision as the right one (i.e., I have to be right).
  3. I’d have to buy back into the market at exactly the right moment (before the market starts to recover).

With my investments, I fully intend to stay the course regardless of the election’s outcome.

Are you diversified?

The outcome of the election may produce short-term “winners” and “losers” as far as specific industries and companies – all the more reason to make sure you’re in a globally diversified portfolio. (If you only own a handful of stocks, your risk of large losses is huge with or without a looming election.)

Yes, a financial advisor is once again suggesting you do what you’ve heard over and over again – stay the course. Yawn. The risk of reacting to any type of possible world economic situation that you cannot control is far greater than the risk of sticking with your plan and staying focused on the things that you can control. Of course, I’m not saying you can’t become an expat in Ecuador if you don’t like the election’s result, just make sure to read my blog about living abroad first.

Happy planning,

Barrett

Disclosure

Abacus Wealth Partners, LLC is an SEC registered investment adviser. SEC registration does not constitute an endorsement of Abacus Wealth Partners, LLC by the SEC nor does it indicate that Abacus Wealth Partners, LLC has attained a particular level of skill or ability. This material prepared by Abacus Wealth Partners, LLC is for informational purposes only and is accurate as of the date it was prepared. It is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy or investment product. Advisory services are only offered to clients or prospective clients where Abacus Wealth Partners, LLC and its representatives are properly licensed or exempt from licensure. No advice may be rendered by Abacus Wealth Partners, LLC unless a client service agreement is in place. This material is not intended to serve as personalized tax, legal, and/or investment advice since the availability and effectiveness of any strategy is dependent upon your individual facts and circumstances. Abacus Wealth Partners, LLC is not an accounting or legal firm. Please consult with your tax and/or legal professional regarding your specific tax and/or legal situation when determining if any of the mentioned strategies are right for you.

Please Note: Abacus does not make any representations or warranties as to the accuracy, timeliness, suitability, and completeness, or relevance of any information prepared by an unaffiliated third party, whether linked to Abacus’ website or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

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