In the past, we’ve written about market noise and its emotional impact on investors’ psyche and more importantly behavior. Whether it’s about fear of recession, satisfaction with the direction of the country or what will the fed do with interest rates, the range of topics that will elicit some emotion seems endless. Today, we’d like to highlight the question: “what will happen based on the results of the Presidential elections?” Elections have always added some degree of emotion, or market noise, to investor expectations and behavior. We believe 2024 won’t be any different.
We’ve included illustrations below that highlight taking the long-term view, rather than getting caught up in the political headline du jour.
Our key takeaways are:
1. Historically, US markets have generally risen in election years.
2. Markets are non-partisan.
3. Investors should focus on fundamentals and stick with their long-term plan.
4. Basing your investment decisions on a specific political party victory during a Presidential election year is not a winning strategy.
5. The historic performance of stocks during election years supports a potential opportunity for investors.
Our message to our clients and friends is to ignore the short-term volatility caused by market noise and in 2024 that would include the outcome of the Presidential elections. Rather, we suggest focusing on the fundamentals over the long term and areas you can control, like cash flow, tax management and planning for upcoming changes to the estate laws. If history is a guide (and it usually is), ignoring the noise and staying invested will produce greater long-term results than trying to capture some elusive advantage through timing the market.
