Historically, the American presidential election impact on investments has ranged from merely choppy to highly volatile. The stock market generally reflects political uncertainty to some degree as investors wonder about future policies the winner may endorse. Stark differences in economic policy among current candidates complicate the market even further.
Whatever effect the upcoming results may have on the stock market, it’s important to remember that the election impact on investments is usually short-term. While fluctuations can be alarming, maintaining a long-term perspective is crucial for continued prosperity. Here are some things to consider during the 2024 election cycle.
Understanding Market Volatility During Elections
The election impact on investments can manifest itself in several ways, including:
- Policy proposals: Candidates’ plans for the economy can affect investor sentiment and cause stock price, tax, and interest rate fluctuations.
- Media scrutiny: Constant coverage of the election—especially from outlets that favor one candidate over the other—can cloud investors’ decisions.
- Herd mentality: Election uncertainty can generate a collective response from investors that could snowball across the market.
- Economic indicators: Standard investment benchmarks get more intense inspection during election years, particularly employment numbers and GDP growth.
As the number-one economy in the world, America’s market behavior impacts global economies to a great extent. In that light, the U.S. election impact on investments is outsized across the globe.
Strategies for Navigating Election Noise
Keeping a level head during the election cycle is vital for investors. Here are some ways to get through the hysteria and hype:
- Stay focused on the fundamentals of your investments, especially over the long term.
- Keep diversifying and rebalancing your portfolio to mitigate risk.
- Consider strategies which strive to avoid downswings.
- Avoid making financial decisions based on emotion.
Remember, your investment portfolio should be oriented toward long-term profitability. Short-term events, like elections, always pass.
Analyzing Candidates’ Economic Policies
When candidates reveal their plans for economic growth, pay special attention to how their policies might impact business sectors. Healthcare policies, for example, might affect pharmaceutical corporations and insurance companies, while energy incentives could have ramifications on green energy stocks and traditional oil and gas companies.
While you’re at it, zero in on specific details of the candidates’ economic plans rather than simply taking their stump speeches and campaign promises at face value. Whether you’re conservative, liberal, or moderate, it’s wise to use non-partisan news and information sources to learn about policy.
Practical Tips for Investors
All investors should take these practical steps to weather the storm of uncertainty surrounding the upcoming election:
- Review your portfolio regularly: Examine your portfolio daily, diversifying and rebalancing your asset allocation in light of market conditions.
- Consult a financial advisor: Seek professional guidance on getting through turbulent times in the market.
- Stay informed yet unbiased: Verify the credibility of news sources, cross-reference information, seek hard data and evidence, and avoid sensationalism.
Above all, remember that the election impact on investments is only temporary—the long game is the one you should be playing.
Get Financial Advice on Navigating the Election Impact on Investments
The financial professionals at Paragon Wealth Management have ample experience guiding investors through volatile times in the market, including those that arise during the election cycle.
The 2024 election promises no small amount of unpredictability. The right financial advisor can calm your misgivings and keep your investment portfolio on track, even as elections and other world events influence the investment arena.
Contact us today to learn more about our services. To schedule a meeting, call (215) 543-6576 or email phil@paragon-wealth.com.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual. All investing involves risk including loss of principal. No strategy assures success or protects against loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. Rebalancing a portfolio may cause investors to incur tax liabilities and/or transaction costs and does not assure a profit or protect against a loss.
About Philip
Philip Rosenau is Financial Advisor and Founding Partner at Paragon Wealth Management, a financial services firm based in Doylestown, Pennsylvania, dedicated to professionally supporting, educating, and providing informed direction to each and every client. As a longtime resident of Bucks County and the son of a local entrepreneur, Phil understands the unique needs of small business owners. His clients rely on him to build a manageable road map toward their goals, and he takes pride in providing them with the knowledge to understand their unique financial situation, and helping them navigate their financial future with confidence.
Phil obtained a bachelor’s degree in economics with a minor in business management from Drew University, and his passion for creating and maintaining business relationships drove him to join the team at Paragon Wealth Management. Outside of the office, Phil enjoys spending time with his wife, Caroline, and two children. He is a member of the MDM networking group, active with the local CrossFit community, and is also proud to be part of the Drew University Lacrosse Legacy, where he played all four years. To learn more about Phil, connect with him on LinkedIn.