As the old Wall Street adage goes, it is time in the market, not timing the market, that will make you a successful investor. We are coming up on an event that will test this saying once again.
As the presidential election approaches, many investors are contemplating whether or not to sell their investments and put the proceeds in cash, depending on who they think will be in the White House in 2025. This has been the case during every election since I have been in the business (over 25 years) but has been much more pronounced in the past two presidential elections, in 2016 and 2020.
Sadly, this strategy never works. I have seen investors wait years to get back in the market, missing out on huge gains because of their political preferences. Presidents have little influence on the economy and even less on stock market performance. In fact, Schwab strategists recently produced a great observation of historical data about this very topic:
If you started with $10,000 in 1961 and invested in the S&P 500 only when there was a Republican in the White House, your investment would have grown to $102,000 in 2023. If you did the same but with a Democrat in the White House, that investment would have grown to $500,000. But none of that compares with the $5.1 million you would have had if you had stayed invested the whole time, regardless of who was president.
So, go vote for your candidate and feel good about it, but regardless of who wins, stick with your investment plan. You’ll be glad you did.
Please comment or send an email if you have any questions.
Joe Baker, CFP®
Baker Asset Management, LLC
joebaker@bakerassemanagement.com
