As if volatility brought on by the pandemic and attempting to plan for taxes during this time wasn’t hard enough, we are also on the brink of an election. This election is expected to bring even more turbulence in the market, however, historical data shows it is not usually long-lasting.
Many people are feeling the impact of the uncertainty of 2020. Remember in January how you were so tired of hearing people say, “here’s to clarity in 2020”? Well, this year turned out to be the opposite. Many of us were expecting to see market volatility based on an unprecedented election. Investors in some of the top dividend stocks and dividend harvesting funds took it harder than any prediction tool or expert could foresee.
If you can relate, know that you are not alone. We are here to help ease your worries, share our insights and expertise in planning for volatile times.
Take into consideration the history
When you look down memory lane, to previous presidential election cycles, there are some correlations with stock market returns, though not always in the same direction. According to YDataCharts, for the last 90 years, the Dow Jones Industrial Average increased roughly 10.0% in a president’s first year and 7.9% the following. Do we expect to see that this time? Maybe. However, Brie Mason, an advisor at Regent Wealth Managements and the COO, explains what we did see this as we ramped up and prepared for tomorrow’’s election.
Brace for impact?
Security is important and people like to hope for the best, but plan for the worst. There’s a lot of talk around how hard the market is hit around the election, and to some extent, it may not be as bad as people expect. However, before we dive into the nitty-gritty, Brie explains why this year isn’t a one size fits all.
That is why fiduciary advisors will advise you to hold off on taking action based on fear, especially when it comes to your investments. These quick-fire decisions can have an effect on the market! In our experience, this is the worst decisions you can make nearing an election and shortly thereafter:
It’s usually ill-advised to move your investments to cash
Why? Because you need to be right twice – when you decide to get out of the market, and when to get back in. And no one is ever consistently right twice! There are some exceptions to this rule though. If you have earmarked the investment for a life change, such as a new house, that may be one of the few exceptions to sticking with your investments.
Our main advice
There’s a lot of guidance we could give, but this is our one main piece of advice!
We are down to the wire with these last few days before the election, and the Regent Wealth Management team is here to answer any questions you may have about your investments now or in the coming days. Schedule a virtual visit with one of our advisors.