US Election

US Elections – Should you make moves in your portfolio?

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The US election is weeks away and there is no shortage of predictions on how the winner will impact the markets and economy as a whole. Although our natural reaction is to guess how the outcome of the election will impact your wealth, it becomes a futile exercise when we realize how much there is that we don’t know about what comes next.

Here’s our list of questions that have yet to be answered:

  • Who is going to win?
  • Which policies will actually be implemented by whoever wins?
  • What impact will whoever wins have on consumer spending and sentiment in the economy?
  • Which sectors will be the biggest winners and losers?
  • How will investors react or what have they already priced in regarding the outcome of the election?

The two most recent elections provide a quick example of how predictions are not always correct. When Obama was elected there were people predicting that his “radicalism” was ultimately going to kill the Dow. Well, stocks set off in 2009 on a bull market that lasted the entirety of the next decade and there were nearly 130 new all-time highs on the S&P 500 during this time. It was no different when Trump got elected in 2016. Dow futures plummeted on election night and the global sentiment was that he’d plunge the world into a recession “with no end in sight”. As we now know, markets have been fine, continuing to hit all-time highs.

Our philosophy has and always will be that investors are rewarded for having a long-term outlook on financial markets and not becoming overwhelmed with timing the ups and downs in the short-term. This sentiment does not change during an election, no matter how much media coverage or “doom and gloom” surrounds the current environment.

The long-term trend of the stock market has been up no matter who the president is:

 

 

Our opinion is that the short-term volatility is likely to be very high, and if the election is contested (which the Trump campaign has explicitly said will be if it is a close Biden victory) this will only be exacerbated. However, regardless of this short-term volatility, whether it is a Republican or a Democratic White House, the long-term outlook of markets is positive.

Embedded within our philosophy is to seek opportunities to buy when the markets provide a sale on equities (buy-low and sell-high). If these opportunities arise following the election, this will be our objective just as it was in March of this year.

Part of our duty as your financial advisors is to provide guidance through tumultuous times. If you have any questions or concerns regarding the current environment, please do not hesitate to reach out.

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Colin Sabourin is a Winnipeg-based investment & financial advisor with Harbourfront Wealth Management. His specialty is working with farmers who are planning to sell or transition their farms within the next 5 to 10 years. 

Disclaimer: The views expressed are those of Colin Sabourin, Certified Financial Planner, and Investment Advisor, and not necessarily those of Harbourfront Wealth Management Inc., a member of the Canadian Investor Protection Fund.