Dear Bernard,

"What happens to my investments if Harris wins? What happens to my investments if Trump wins?"

These are probably the two questions we are getting most as we meet with relationships.

If you remember, we discussed this topic a few weeks ago. Despite the fact that a few weeks can be considered a lifetime in political terms, many of the basics have not changed. However, to answer some of these questions in a more specific way, let's take a look at the topics:

Which political party has been better for investors? Investing during an election year can stress your nerves. Looking at the intensity of the 2024 election cycle, emotions and biases are on full display for many. However, the experts (economic, not political) will tell you to tune out the noise and focus on fundamentals. According to The Capital Group, historically speaking, there has no real difference with market returns when focusing on long term (1).

What typically happens to the stock market during an election year? Political speeches and debates and advertising may have an effect when it comes to helping you to choose you to vote for, or not to vote for. However, market volatility tends to be short lived and is more prevalent during primaries than in a general election (2).

Which sectors have done best in election years? History again shows us that there is no go-to sectors, or market sectors, to avoid in an election year. Recently, health care and energy seem to grab most of the headlines. These areas seem to draw the most rhetoric or have the most interest. However, as before, long-term fundamentals take precedence over short-term political posturing (3).

What mistakes do investors often make in election years? Historically investors have added funds to money markets, which offer some of the lowest risk investment vehicles. By contrast, equity funds have had the highest net inflows in the year immediately after an election. However, data has shown that remaining fully invested has more often produced better results the sitting on the sidelines (4).

So to summarize, the key points are these:

• Election results have had very little impact on long-term investing.
• Markets have been more volatile during primary season, but tended to rise strongly thereafter.
• Investors often sit on the sidelines during election years out of fear and uncertainty, but that's rarely a winning strategy.
• Investors who were fully invested or made monthly investments did better than those who stayed in cash.

Capital Group has made this data available to all investors in their "Guide to Investing in an Election Year - 2024 Edition.

If you would like your complimentary copy of this literature, email us at the contact link above and we will be sure to send you a copy.

As always, thanks for reading.

Bernie & Chad

1, 2, 3, 4: Capital Group Guide to Investing in an Election Year - 2024 Edition