The Election, the Markets and You!

Welcome to the special election coverage newsletter from capital design private wealth. Elections can be full of uncertainty. The news is constantly blaring information about new candidate developments and how those affect public sentiment. And, of course, how it affects the economy in the markets. But should all that noise really influence your financial plan and investments? Vanguard has done a study recently. Did you know that since 1860 the average return of a 60% stock 40% bond portfolio during election years is 8.9% and did you also know that the average return of all the non-election years is 8.1%? It's interesting to see what happens when we take a deep breath, remove the noise and just look at the data. I'm not understating that the market can be really volatile: 2020 is a perfect example of that. However, volatility works in both directions, you see the best and worst trading days usually happen in proximity of each other. Long term investing success does not rely on short term events. It relies on economic growth, corporate profits, interest rates, innovation and about a dozen other factors. The bottom line is that elections are one of those events that should not sway us from sticking to our financial plan. Successful investing is understanding what you can control and letting your emotions take a back seat to the financial plan you have in place. An advisor peer of mine said recently: “the winning strategy is to only use elections for their intended purpose; to exercise your Democratic Right and have a voice in the direction of our country. Last time I checked you don't get a sticker that says I voted with my portfolio. Have a great day.