French novelist Jean-Baptiste Alphonse Karr once wrote: “Plus ça change, plus c’est la même chose.” This quote closely translates to “The more things change, the more they stay the same.” We’ll concede this feels like a stretch in the context of today’s environment. Still, one constant that holds fast is that it felt like a stretch to other generations as they slogged through some seemingly tectonic political grievances. Generally, this quote can be taken to mean that some fundamental truths hold firm through shifting landscapes. Let’s begin on the lighter side. Both Washington and Jefferson had familiar-sounding takes on the primary “media” of their day…
Even though early presidents were staunch defenders of a free press, they still were upset by newspaper coverage.
Newspapers filled “with all the invective that disappoint, ignorance of facts, and malicious falsehoods could invent to misrepresent my politics.” —George Washington
“Nothing can now be believed which is seen in a newspaper. Truth itself becomes suspicious by being put into that polluted vehicle.” —Thomas Jefferson
It’s refreshing to know that it’s not just our generation who’s become accustomed to feeling like any real facts are elusive. You’ve likely picked up from our past communications that the media’s inclination to sell fear could be the most threatening advance to your long-term objectives. This approach is not new.
We’ve experienced meaningful ideological shifts throughout our history. Despite this, government spending, business investment, and, most importantly, general consumption has remained relatively unchanged. In other words, the US economy has NOT been materially affected by any political party or agenda and that’s likely not going to change now either. The chart below shows that our economy is primarily driven by consumption, and just how consistent that driver has been.
The economic engine has a noticeable way of not conforming to our opinions. It’s even audacious enough to reject the opinions of some really smart and successful people that surely have it “all figured out.” Michael Boskin is the T.M. Friedman Professor of Economics, and Senior Fellow at Stanford University’s Hoover Institution, and Mark Cuban is a successful entrepreneur that was ranked at #179 on the 2019 Forbes 400 list. Below are their predictions that I’m sure they believed beyond a reasonable doubt. Just like you and I, it’s not wise to let our feelings guide our investment strategy. If Michael or Mark allowed it to guide theirs, they likely weren’t very pleased with the results. The dire predictions of disappointed voters tend not to come true.
Let’s be logical about this, and look at the actual numbers. The stock market doesn’t seem to care if you don’t like who is President. In fact, some of the best returns in the market came when the presidential approval rating was in a very low range of 30% to 50% approval. This means that many of the best years in the market came during periods when half or more of the country didn’t approve of the job the current administration’s job! Investors are better off staying invested in well-designed portfolios through both Democratic and Republican administrations. “Partisan” portfolios (investing only when your preferred party is in office) has underperformed by a LARGE margin a “Bipartisan” approach when investors stay invested regardless of who is in office. The chart below offers a nice representation of this – the more time we spend participating in the markets (regardless of the political, or economic, environment), the better off we will be as investors.
Now, this Election dialogue wouldn’t be complete without addressing the venomous culture in Washington today. As Brian Levitt, Global Market Strategist for Invesco, recently wrote, “one of the most infamous duels in American history was the result of political disagreements. On the cliffs of Weehawken, in 1804, Alexander Hamilton, the former US Treasury Secretary, fought with Aaron Burr, the then sitting Vice President of the United States, which ultimately led to the death of Mr. Hamilton. As long as Vice President Pence isn’t fighting any duels, we’re actually maintaining a higher level of political discord.”
We can all probably agree that if we spend too much time focusing on and dissecting anything, it can become more amplified in our lives. By and large, this is not a positive tenet of our human nature. Are elections scary? Yes. Do they produce stress? Of course. Could markets be more volatile around election time? Highly likely. Should an investor make short term financial decisions around a political leader or party? History tells us, emphatically, “no.” It’s not easy. It may be the hardest thing to do, setting aside our feelings, and remaining committed to a long-term plan. Our feelings shouldn’t get a “vote” in the election between our steadfast resolve and short-term waywardness.
Joel D. Malick AIF® AWMA®
Strategic Financial Partners
Joel Malick is a registered representative and investment advisor representative of Securian Financial Services, Inc. Securities and Investment Advisory Services offered through Securian Financial Services, Inc. member FINRA/SIPC. Strategic Financial Partners is independently owned and operated. 1755 Telstar Drive, Suite 501 Colorado Springs, CO 80920. CA insurance license number: 0E42461
10 Election Truths – Invesco 2020 Research
This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. This information should not be relied upon by the reader as research or investment advice regarding any funds or stocks in particular, nor should it be construed as a recommendation to purchase or sell a security. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested.
Registered representatives and investment advisor representatives of Securian Financial Services, Inc. Securities and investment advisory services offered through Securian Financial Services, Inc. member FINRA/SIPC. Steadfast Wealth Co is independently owned and operated. 7222 Commerce Center Dr., Suite 108 Colorado Springs, CO 80919 TN 3217424 DOFU 09/20
Joel Malick currently maintains the Accredited Investment Fiduciary (AIF®) and Accredited Wealth Management Advisor (AWMA®) designations. Joel and his team at Strategic Financial Partners recognize that running this race for the long term is one of the greatest challenges you’ll face in your lifetime. Thus, they combine critical planning and investment strategies with real-life perspectives. Their consultation is provided at no additional cost to 403(b) Alliance Retirement Plan participants.