Adjusting investment prior to an election

[Sandy & Shirley]

There are some major differences in the way that the current candidates are approaching various segments of our economy. Each candidate has, in my opinion, segments of the economy that will do better and other segments that will do worse under whatever new administration we end up with.

I’ve heard comments like go to cash or invest in X or invest in Z. Does anyone here have any advice on what they would do and why?

Please do not turn this topic into a political battle!

 

[RunningBum]

Stay the course. Think long term.

 

[Sunset]

Not changing my investments based on what people report leaders will do, as a lot can happen between now and then and change everybody's mind.

 

[target2019]

Wise advice from a Schwab article, "What to Watch as the 2020 Election Approaches."

What should investors do?

For now, the election remains four months off, and there currently are much more pressing health, economic and social issues on the front burner. The market tends to be forward-looking, and generally the shifting odds of various policy changes are continually reflected in stock prices. That’s one reason we don’t advise trying to “time the market” or trade around a particular election outcome.

Even if political uncertainty leads to volatility in the stock market, it can be helpful to keep an eye on the longer term. If your portfolio is diversified and geared toward your goals, it should be well-placed to weather market volatility. Elections may be cyclical, but they shouldn’t dictate your investment decisions.

 

[big-papa]

Stay the course. Think long term.

+1 Invest broadly, not narrowly, and then stay the course and ignore the noise....

 

[audreyh1]

I’ve always been wrong about election effects on the stock market so it’s good that I don’t take action.

 

[Fermion]

I’ve always been wrong about election effects on the stock market so it’s good that I don’t take action.

Actually, could you post your thoughts? If you are indeed always wrong, I could make a lot of money from your opinions.

 

[COcheesehead]

Keep a few years worth of living expenses in something fairly liquid, but not cash.
Keep a few more years worth in something income producing.
Keep the rest in something that will pay you to wait.

In the short term the market is unpredictable. In the long term it’s pretty predictable.

Relax, enjoy life and don’t guess at the future.

 

[jimbee]

I don't change my investments based on what I think the market will do, because I don't know what the market will do. Stick with the plan.

 

[Aerides]

Do nothing other than your existing strategy. The major investors, banks, and megacorps have already placed their bets and factored that in, so you're behind the game already if you wanted to play.

 

[Whisper66]

I’ve ensured we have 3-6 months of expense money in cash, 3 yrs in cash plus short or medium term bond funds, and an asset allocation we are comfortable with.

 

[Rianne]

I think science will drive the economy and give business confidence once everyone is on the same page. Masks, distance, sanitize. That is the #1 concern today. I don't care if Bugs Bunny is the president and the Simpson's control congress.

 

[Gumby]

In general, I would not try to "play" the election or any other particular event. Pick an asset allocation, buy quality mutual funds and leave them alone.

However, if you really must play the election, bet on the outcome contrary to the polls, because the more likely electoral outcome will already be baked into the price. For example, right before the 2016 election, stock in firearms manufacturers all dropped precipitously, because it was believed that the predicted winner would promote more restrictive laws. When the outcome was not as expected, they all rose sharply. If you had bought on the morning of November 8, 2016 and the outcome was as expected, they probably would not have dropped much further and you could get out without a big loss. However, if you had bought and the election result was contrary to prediction, you would have made a bundle the next day. So, fairly low downside and a good upside.

 

[OldShooter]

Buffett: "Much success can be attributed to inactivity. Most investors cannot resist the temptation to constantly buy and sell. ... Lethargy bordering on sloth should remain the cornerstone of an investment style."

 

[Rianne]

Buffett: "Much success can be attributed to inactivity. Most investors cannot resist the temptation to constantly buy and sell. ... Lethargy bordering on sloth should remain the cornerstone of an investment style."

Thank you Buffet, for allowing me to be totally lazy.

 

[OldShooter]

Thank you Buffet, for allowing me to be totally lazy.

I tell my Adult-Ed investing class students: "Investing is boring. If you aren't bored, you are doing it wrong."