Politics and investing don’t mix

“I’m worried about the election. Should I take some money off the table?”

“What will happen to my investments if (the candidate I dislike) becomes president?”

These are some of the questions and concerns I hear frequently during any presidential election year. Investing during an election year can be tough on the nerves, and this year’s election is no exception. With the candidates and the issues as polarizing as they are, it’s natural to feel some anxiety about the future.

While the outcome of the election is unknown, one thing is for certain: Between now and Nov. 3, there will be a steady stream of opinions from the pundits and prognosticators in the media about how the outcome of election will impact the stock market. And investors would be well-served to avoid the temptation to make significant changes to a long-term investment plan based upon these sorts of predictions.

If you are tempted to change your investment strategy because of the presidential election, you’re not alone. According to a recent survey by the Hartford Funds, 93% of investors believe the presidential election will impact the stock market. Nearly half — 45% — of those surveyed said they plan on making changes to their portfolio before the election.

However, a look at history shows there is essentially no difference in stock-market performance between the two major political parties over the full four-year term following a presidential election. Since 1929, the market has returned an average of 10.3% per year with very little variation between the returns during each party’s time in office.

When it comes to making investment decisions in a presidential election year, investors would be wise to put aside their political biases. They can create problems for even the most seasoned investors, causing them to stray from their well-thought-out, long-term financial plans.

No matter which side you’re on, you probably feel strongly that the person or party you vote for will have a positive impact on the country, the economy, the stock market, your personal finances, etc. You also probably feel strongly that if their opponent wins, the opposite will occur.

The fact is that the stock market doesn’t know and/or care if the person residing at 1600 Pennsylvania Avenue for the next four years has an R, or a D after his last name, and neither should you.

Well, at least not from an investing standpoint!

Martin Krikorian, is president of Capital Wealth Management, a registered investment adviser providing “fee-only” investment management services located at 9 Billerica Road, Chelmsford. He is the author of the investment books, “10 Chapters to Having a Successful Investment Portfolio” and the “7 Steps to Becoming a Successful Investor.” Martin can be reached at 978-244-9254, at www.capitalwealthmngt.com, or via email at info@capitalwealthmngt.com.