With the election around the corner, I’d like to focus this video series on politics and your portfolio: investment dos and don’t.
But before we get into that, Let’s first start with a short experiment. The experiment consists of reading just two statements:
Statement # 1: Kamala Harris is the most consequential Vice President of our generation and is the leader our country desperately needs at this time.
Statement # 2: Donald Trump was the best President of our lifetime, and we need him to get the country back on track and make America great again.
Before I lose viewers to these two polarizing statements, the experiment’s purpose is simply to gauge whether either comment got your emotional juices flowing. My guess is that at least one of these statements stirred something inside you. Afterall, there is nothing more triggering than politics. People that are seemingly rational in all other aspects of life can act exactly the opposite when it comes to politics.
The reason I bring this up is that in a few short days (or weeks, depending on how long it takes to tally the votes) we will find out who will be the next president of the United States. Regardless of your political persuasion, it’s imperative to not make investment decisions based on who is in the White House. Politically charged, impulsive moves almost always cost investors dearly.
That’s why I decided to outline a short framework of “Dos and Don’ts” to help investors make prudent decisions during this election cycle.
And the first is, Don’t make emotional or impulsive decisions: Before the 2008 election, I had a friend tell me that if Obama won, he would liquidate his entire portfolio and flee the country. (And he actually went through with it…). During the 2016 election, I had colleagues tell me they would move their clients’ money to cash if Trump won the election. Both decisions turned out to be incorrect, as the markets hit all-time highs during each of their presidencies. The same is true today, with the markets also hitting all-time highs under the Biden presidency.
The point here is simple: Do not rush to make investment decisions based on who the new president is. Take time to digest the information. Once your strong feelings subside, you can revisit whether to adjust your portfolio. In the meantime, it’s important to remember that moving your entire portfolio to cash based on who wins is always the wrong decision.