Are you nervous about election day? Do you think a red or blue election win will shape the financial markets? David Booth of Dimensional Funds recently shared his take in in the article Vote with Your Ballet, Not Your Life Savings. Below are some of my favorite parts.
5 Key Points
- “Election outcomes are just one of many inputs that can impact stocks and bonds. After all, shareholders are investing in companies, not in politicians.”
- “Over the past century, through Republican and Democratic administrations, US stocks have consistently trended upward, returning on average about 10% a year.”
- “History shows us that markets have moved forward regardless of who has led the polls—and won elections.”
- “When people feel uncertain, they may be tempted to make investment decisions based on how they think elections might unfold. But there’s nothing in the historical data that’s strong enough to warrant changing your investment allocation based on who you think might win.”
- “Vote with your ballot, not your life savings.”
Takeaway
Elections bring out a lot of strong feelings. Feelings can lead to irrational changes in your investments. Whether we see a red or blue wave this election, don’t let the results change your investment plan. You can read the full PDF article here.
