Dear Bernard,

Do you know what will happen to your investments if the person you don't like is elected President?

In this election cycle, like in all of the other cycles since I have been a financial planner, I get asked this question. Republicans fear a Democrat in the White House. Democrats fear a Republican in the White House.

Do you want to know something interesting? If you started with $10,000 in 1961 and invested in the S&P 500 only when a Republican was in the White House, your investment would have grown to $102,000 in 2023. If you did the same but with a Democrat in the White House, that investment would have grown to $500,000. However, none of that compares with the $5.1 million you would’ve had if you stayed invested the whole time. (Source - Yahoo!Fiance, July 21, 2024)

The sell-off, or correction, we saw this past week or so had little or nothing to do (in my opinion) with the upcoming election. Instead, the market was spooked by a number of factors. These included a change in interest rates in Japan, a shift in the manufacturing index to below 50 from above 50, a weak jobs report, and a drastic over-valuation of stock such as a Tesla, Alphabet, and Nvidia. These led to a fear that we could be heading into a recession.

While no one can predict when, or how, the market will react to any news, the recent volatility stresses the importance of a diversified portfolio. The goal of your investments should not be to always get the greatest return possible, but to maximize the returns within your risk tolerance and goals.

What I mean by maximizing the returns within your risk tolerance and goals is explained this way: If you can reach your goals by achieving a 6% return, then you don't need to pursue a more risky invesment just because it has a greater potential of a higher gain while also carrying a higher probability of a greater loss.

In some cases, less is more.

We have stressed this in the past, but we do utilize a risk assessment tool. If you have not updated your risk score recently, we encourage you to take a few moments and go through this tool. Once you complete and submit this questionnaire, we will be sent your results. We will then forward these to you for review.

Know Your Risk Score

If you have questions about this, recent market volatility, or any other matter of importance, please reach out to us.



As always, thanks for reading.

Bernie & Chad