Broker Check

Are the Politicians Going to Sink My Portfolio?

| October 27, 2016
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Lately, client meetings have revolved around one topic, the American Presidential Election. American’s top three concerns at any given time are the economy, their job, and money.  Not particularly in that order, but if you ask anyone walking down the street, those would be the general go to answers.  However, lately a new answer has popped up, Americans are absolutely freaked and fed up with the presidential election.  Moreover, the American Psychological Association (APA) has recently released some studies regarding anxiety levels of many Americans, being at acute levels regarding the election.

All the angst over the election has put clients on edge, and naturally they’re worried about their financial plans.  How will the election effect our investments?  How will the election effect our long-term goals?  Should we move all to cash, and build a bunker in our backyard?  Should we move to Canada?  That last one was my favorite, because at the time I couldn’t entirely tell if the client was joking. By the way, he was.  These questions and scenarios are what go through a client’s mind during election years.  The simple fact is people love this country, and want what they perceive is the best for America.

I’m a huge West Wing fan.  I’ve probably watched the whole series multiple times through during Netflix binges, and self-loathing states of mind.  One thing that always caught my attention is that they paid attention to the stock market, and its various reactions to policy proposals, or crises that inevitably popped up.  The politicians use the stock market as a barometer on public opinion in real time during the show.  The stock market was, and still is one of the few real-time poll taking devices we have in this country.  Now you may be saying to yourself, "well that’s TV and not based on reality".

However, I give you the Troubled Asset Relief Program (TARP) vote.  The bill was rejected via a vote of the House of Representatives on September 29, 2008.  The market responded by having its’ worst one day point drop in history.  The Dow Jones would end the day down seven hundred and seventy-seven points. On October 3, 2008, a reworked $700 billion TARP plan, renamed the Emergency Economic Stabilization Act of 2008, passes a bipartisan vote in Congress.  Four days, and nearly a thousand points down later, all of a sudden Congress could get along.  The point is, the politicians responded to the carnage, because they knew voters would blame them for not saving the economy.  At the end of the day, it’s in the politician’s best interest to have a thriving economy.

Regardless of your political affiliation, the simple fact is the politicians won’t sink your portfolio.  Any politician that would drive the economy into the ground would be replaced quickly in the next election.  Americans are very finicky about the Country’s economy, and won’t suffer those who wish to tamper with it in a negative way.  The stock market itself has acted as a check and balance on many economic thoughts or proposals put forward by our leaders.

 

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations of any particular security, strategy or investment product for any individuals. Information contained herein has been obtained from sources believed to be reliable but not guaranteed. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.

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