A new political index, released just last week, allows analysts to measure candidate popularity through a social media lens. You might have heard of it before. It’s called Twitter. That’s right; analysts now have tools in place to translate nearly 400 million daily tweets about party candidates into meaningful data points of popularity1. Wow.
In our recent blog post entitled “Top Six Investment Mistakes” we recounted the top six mistakes we’ve observed clients make over our 21 years of experience. Because the election is a few short months away, revisiting observation #6: “Investing Based on Your Political Views” seems relevant.
As is typical for an election year, our meetings with clients often cover the question, “How will my portfolio be affected by the outcome of the election?” While a common conception is that Republicans are best for business, the overall stock market has fared better historically when Democrats have been in office. However, there is no guarantee this will continue to hold true, nor does this general perspective take into consideration other vacillating factors, including Congress or local-level politics.
Politics and business are intertwined. There’s no doubt about that. But rather than using your portfolio to cast a vote of confidence for one political party or another, think of your portfolio as casting a vote of confidence for good, quality businesses. These companies are talented, innovative, smart, and dynamic; they will adapt to whatever is thrown at them, including government policies that you find absurd. Just make sure they’re not too popular (i.e. overpriced).
Coming up September 26, 2 – 2:30 pm
Webinar: “How the November Election Results Could Affect Your Portfolio”
– Understanding historical market performance leading into an election
– Examining the effects of each candidates’ policy on your investments
– Preparing your portfolio for the “fiscal cliff”
Jim Bell, CFP©, President & Founder
Matt King, CFA, Managing Director, Chief Investment Officer
Reserve your spot by registering today at: https://www2.gotomeeting.com/register/724736914