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Is your Portfolio Election-Proof?

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As the 2024 presidential election approaches, investors may find themselves grappling with concerns about potential market volatility and the impact on their portfolios. While political headlines often stir anxieties, historical data offers a different perspective. This post explores the insights gleaned from past elections and provides strategies to navigate the upcoming months with confidence.

Dispelling Myths: Market Performance in Election Years

Contrary to common belief, presidential elections historically haven’t significantly influenced long-term market performance. Here are key points to remember:

  • – Positive Returns Prevail: Since 1928, the S&P 500 has delivered positive returns in approximately 83% of presidential election years. Even during re-election years, the average annual gain remains a respectable 12.2%.
  • – Focus on Fundamentals: While headlines may capture attention, underlying economic factors typically exert more influence on market movements. Factors such as inflation, interest rates, and corporate earnings play a greater role in long-term returns.
  • – Midterms Matter More: Interestingly, research suggests that midterm election years, which occur between presidential elections, might witness even better market performance in the subsequent year.

Strategies for Smooth Sailing Ahead

Drawing insights from historical trends, here are some strategies to consider:

  • Maintain a Long-Term Perspective: Avoid letting short-term election noise cloud your long-term investment goals. Stick to your asset allocation plan and refrain from making reactionary trades.
  • – Diversify Wisely: Spread your investments across different asset classes and sectors to mitigate risks associated with specific election outcomes.
  • – Rebalance Periodically: Regularly evaluate your portfolio’s alignment with your risk tolerance and goals. Rebalancing helps maintain diversification and prevents overexposure to any single asset class.
  • – Focus on Quality: Seek out companies with robust fundamentals, regardless of their political affiliations. Prioritize businesses with consistent earnings, sound management, and sustainable competitive advantages.
  • – Stay Informed: While steering clear of emotional reactions, stay abreast of key economic indicators and policy proposals that could impact your investments.

You’re in Control

Despite temporary uncertainties surrounding elections, it’s crucial to stay focused on long-term goals. By adhering to sound investment principles, maintaining a diversified portfolio, and avoiding emotional decisions, you can navigate election years with confidence and stay on course toward financial success.

Disclaimer: This blog post is for informational purposes only and should not be construed as financial advice. Please consult a qualified financial advisor before making any investment decisions.

Gerald Hendrik – President, Rockwall Wealth Advisors

Rockwall Wealth Advisors is an innovative, independent wealth management firm providing fee-only financial planning advice and investment management.

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