Invest During an Election Year: Vote for Your Portfolio
October, 2020
By: Jeff Headrick, Financial Advisor
Learning how to invest during an election year is a worth while pursuit. However, always bare in mind that investing is a long term endeavor.
I played a little baseball as a kid. I can still remember what it felt like to hit the ball on an cold spring day and have the aluminum bat send shock up to my elbows.
But I can also remember games in the summer where I saw my pitch coming right down the middle, and how wonderful it felt to make a base hit.
Invest During an Election: Keep Your Eye on the Ball
I remember a lot of yelling in baseball. Do this! Do that! Swing through! And most importantly, keep your eye on the ball! Whether I was running down a flyball or taking a swing at a fastball --one thing I was told repeatedly: Don't. Take. Your. Eye. Off. The. Ball.
In essence, investing in an election year is no different. We simply have to use the companies that we buy as a metaphor for the ball itself. During an election year, we are not buying presidents. We're not buying seats in the house or trying to win a particular electorate.
So, that's why during an election year it's more important than ever to keep your eye on the companies you buy.
Invest During an Election: The Companies You Keep
For example, when I look at Amazon, Microsoft, Tesla, United Health group, Samsung, Toyota, Nestle, and Apple, I do not see companies that are focused on the election.
I would dare say that most of these companies do not have a plan either way for whoever wins the election. So as investors, why should we?
Furthermore, there should be a huge learning curve for investors during 2020. Here's why:
INVESTING IN 2020: TUMULTUOUS BUT PROFITABLE TO INVESTORS
Our country hasn't been more polarized since the 1960s. In addition, we have had the worst pandemic that we've had in 100 years. Throw in a trade war with China and a contentious election, and you have a recipe for the perfect storm. Or, so you would think.
Yet when we look at how Amazon, Microsoft, Tesla, United Health group, Samsung, Toyota, Nestle, and Apple have performed in 2020, you will see that they have done extremely well in aggregate.
As evidence, I can say this without pause because when I look at two or our largest equity positions ( VUG, GFFFX) I can see that they have positive returns during an election year. The top ten holdings in these funds are weighted towards the stocks mentioned earlier.
Source: Y-Charts
Invest During an Election Year: What We've been Doing
In addition to providing daily support to our client's and their investments, we've been exploring more investments and financial planning topics.
We are intrigued by the following:
Commodities
Faith based funds: See how BIBL has done this year)
Technology funds
How to create the ultimate annual review experience
In addition, we've been helping clients invest more assets during an election year, not less. Ever heard of dollar cost averaging?
And, when it comes to managing risk, we have made sure we are analyzing our clients long term care plans, life insurance, and disability insurance.
All of these are highly important especially during times of rising unemployment.
Invest During an Election Year: Time to Focus
This election year, keep your eye on the ball. Don't let the political rhetoric cloud your desire to become a great investor.
Great investors focus on companies, not candidates.
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