Many of us are nervous about the 2020 election and the stock market.
And, understandably so, because this is an election year like none other.
If you’re worried about your investments, and are wondering, “Will the 2020 election affect the stock market?”…
The short answer is yes.
The stock market and its investors hate uncertainty, which is why election years make people worry.
However, as Kiplinger explains, “The stock market has, for the most part, ebbed and flowed with the four-year election cycle for the past 182 years. Wars, bear markets and recessions tend to start in the first two years of a president’s term, […]; bull markets and prosperous times mark the latter half.”
Instead of panicking, I decided to speak with someone who understands how the stock market has responded to various elections throughout history…and what it means for my investments this year.
To get the full answer to this question, I spoke with Mark Sorensen, CEO and Founder of 401(k) Maneuver, offered by Royal Fund Management, LLC, which is registered as an investment adviser with the SEC.
Watch the full interview below.
After speaking to Sorensen, I feel much more at peace about the 2020 election and the stock market, as well as better prepared to make wise investment choices.
I hope you feel the same after watching it!
Here are a few key takeaways from the interview.
What History Shows Us
There has never been a bull market start or end because of a presidential election.
In the short term, presidential elections can create some volatility, but longer term, elections haven’t really mattered in the pricing of stocks and how they’re valued.
According to Sorensen, if history is any guide at all, the U.S. economy and the stock market will be just fine in the long run – no matter who gets elected.
In fact, in 19 of the last 23 election years – from 1928 to 2016 – the market was up.
Moreover, history shows us that it is not the election that creates a problem; it’s more about how the economy is doing at the time of the election.
What You Need to Do
We study history so we can learn from it and take action – not simply to memorize key facts.
In the case of elections and the stock market, we should take the long-term view.
Sorensen explains, “You can’t guarantee anything in the stock market, and yet I can say that 100% of the time, historically, the market has always come back from any correction or any bear market. You just have to be patient.”
Yes, the 2020 election may cause a short-term volatile period in the market, but in the long term, it will be fine.
If you are considering getting out of the market in the days leading up the the election, take a breath and pause.
If you do get out of the market because you are afraid, you run the risk of not being in when it goes back up.
As U.S. Wealth Management explains, “With presidential elections, you need to make sure to have all the components of a diversified portfolio in place, and then stick to a longer-term strategy that’s designed for more than one election cycle.
What You Should Listen To
A major reason so many of my friends are fearful right now is because of the news headlines.
When researching, I came across this headline: Wall Street is “doomsday prepping” for the election.
That headline is designed to incite fear and panic! Plus, if you speak with market strategists, this is simply not true.
Instead of listening to the talking heads in the media, listen to people like Mark Sorensen who have spent their entire careers learning the ins and outs of the market.
Talk with your financial advisor.
Read a history book.
Go for a long walk.
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Disclaimer: I am not a financial planner or expert. All information in the post is my opinion and should not be used as financial advice. This is based solely on my experiences. Any action you take based on the recommendations from this blog is at your discretion. This post contains some affiliate links. If you click on an affiliate link and purchase a product/service, I may receive a small commission at no extra cost to you. However, I only recommend products, services, and/or businesses that I love and believe will add value to you.