Unlike most of the personal finance blogosphere I am a political junkie. I love talking about it, writing about it, speculating about it, and I just love politics. Aristotle once called it the “master art.” To me it is still the master art. You can’t ever get away from politics. It is one of the most important subjects out there today, but yet we don’t want to discuss it (similar to money issues).
Part of my love and my observation regarding politics is an occupational hazard. After all, I am a professor who specializes in political communication. So I kind of have to be involved. I have a new book that should be published shortly that partly focuses on politics. So I am immersed in it.
So why am I telling you all of this? Well, if you were like me you were glued to CNN, Fox News, MSNBC, PBS, or one of the major networks for the Republican and Democratic National Conventions where Donald Trump and Hillary Clinton have now been officially confirmed as the nominees of their major parties. Moreover, these two candidates have universally high unfavorable ratings. So much so that many of my friends have threatened to sell their stocks, move to Canada or Mexico, and basically go underground if Trump or Clinton get elected.
In fact, there are a number of stories that talk about the doom and gloom that will come if Clinton or particularly Trump is elected. There are a number of doomsday scenarios that will supposedly occur. So based upon those predictions what should your long-term investing strategy be? Should you sell everything? Invest in specific types of stocks? Buy a house in another country? What?
Answer: DO NOTHING!!
Yes, you read that right. Your strategy should be to do nothing. Guess what the same doom and gloom that was predicted today was also predicted in 2012. It was also predicted in 1992 when Clinton was elected.
The evidence tells us that long-term the presidential election doesn’t necessarily mean a hill of beans for our stock portfolios. In fact most of the doom and gloom is mythology. Generally, the stock market appears to do a bit better under a Democratic president but we aren’t talking by a lot. And this doesn’t mean that whoever is elected will not somehow have a direct effect on the economy. Some sectors will do better than others. We will probably have another recession and another bear market. In fact, that will occur at least more than once in my lifetime (assuming I get the opportunity to live for a few more decades).
You don’t invest into the stock market for short-term gains. The stock market should be for a long-time horizon like more than five years more likely 10, 20, 30 or even longer. This analysis by Oppenheimer Funds should help those of you who are still not convinced that you should stay in the market. Don’t sell. Stay the course.
I don’t care if Donald Trump is elected or Hillary Clinton. It doesn’t matter to my personal investing strategy. I will stay the course. I will continue to believe in the United States and the market. Those who have bet against it have done so at their peril. I am not smarter than those people or even Warren Buffett or others.
I can’t promise there won’t be an economic downturn, a bear market, or even a recession based upon the election. Those will happen with other without a Democrat or Republican in office and typically occur for a variety of reasons. But when it comes to my long-term investing strategy I will stay the course and I would be willing to bet money that I will come out wealthier on the other side.