The question of whether or not the U.S. President or a particular party has an impact–positively or negatively–on stocks, bonds, unemployment, inflation, the deficit, and GDP growth–has been flying around like crazy. But especially in the midst of a contentious election cycle, it’s never been harder to find clear answers.
But take a glance at this interactive chart that enables you to click on each U.S. President going all the way back to 1929 to see what the major market and economic indicators looked like for each presidential cycle. I think you’ll find that it’s conclusively inconclusive:
So, should you consider changing your investment plan ahead of the election?
Short answer: No.
And here’s the slightly longer answer from one of the brightest investment people I know (and a darn good guitar player), Jared Kizer, CFA, Chief Investment Officer, Buckingham Wealth Partners:
Everything coming at us right now is purposefully designed to unsettle us. We have to work to be settled in an environment like this. Here are three simple steps you can take to find peace in the midst of the chaos, and likely help others around you do more of the same:
1) Control Your Inputs.
A friend told me yesterday that he needs to replace the screen on his brand new, fancy-schmancy, big-screen OLED television. You know why? Because the banner running across the bottom of the screen of his news channel of choice has scorched itself into the screen. I didn’t even know that was possible.
Turn off Fox News. Turn off CNN. The former has a daily show called “Special Report,” a phrase that was once reserved for something that was Earth-shattering news, and the latter has a daily show called “The Situation Room,” which used to be an actual place in the West Wing of the White House reserved for the most serious of situations are discussed.
No, I’m not suggesting you should be uninformed or fast completely from watching the news, but how can you control those inputs better? For me, I swore off TV news years ago because it seems endemically prone to sensationalism and bias (although yes, everything is biased).
I prefer to read my news through an old-fashioned daily national newspaper and a daily email newsletter that doesn’t take itself too seriously, both with a financial/business bent. Then, I check a few currated newsworthy sources on Twitter a couple times a day.
But most importantly, if I sense my anxiety level rising, I shut down all inflows, because in order to best impact those in my sphere of influence, it’s better to be at peace than to be informed.
2) Broaden your perspective.
The present becomes the past instantaneously. Today becomes yesterday and this year becomes last year. “Can you believe?” becomes “Remember when?” much faster than it feels in the moment.
Whatever happens on Tuesday, it, too, will become the norm and subsequently, history.
3) Practice gratitude and empathy.
Well, I never thought I’d do this, but I’m going to quote Tony Robbins, because he’s just plain right:
You can’t be angry and grateful simultaneously. You can’t be fearful and grateful simultaneously. So, gratitude is the solution to both anger and fear, and instead of just acting grateful, I think of specific situations that I’m grateful for, little ones and big ones. I do it every single day.
And if you were as surprised as I was that I quoted Robbins, now I’m going to go off the deep end and quote Kanye West, but only because his presidential candidacy is entirely lacking in viability:
Empathy is the glue.
Practicing gratefulness is an inward step that can be insurance against anger and fear–and practicing empathy, putting yourself in someone else’s shoes, is an outward step that almost immediately eliminates the barriers between us as humans.
And maybe there’s another lesson in there someplace…that it’s possible to find Truth in unlikely places?
What near-term impact will the presidential election results have on our personal finances? None—or almost none.
The impact of one president chosen over another is romanticized by both parties to convince us of the urgency inherent in our choice. This is especially true in an election cycle that features the economy as its foremost issue at hand. And while I seek not to minimize the importance of our individual votes for president, a recent and historical view provides us with the evidence necessary to conclude that the impact of our commander in chief on our personal bottom line is nominal, at best.
So if you were personally rooting for Governor Romney and fear that President Obama’s reelection spells doom for your finances in 2012, I’d like to allay those fears. Furthermore, if you were a supporter of Obama’s and feel a certain level of financial peace post-election, I might suggest it is unfounded.
The reason presidential elections have little impact on our bottom line is two-fold: First, whatever pet projects the top dog manages to push through are typically phased-in over many years. “Obamacare” is an excellent example of that. Although President Obama’s legacy project has long been passed, it really won’t begin to impact our wallets (or those of our employers) in a meaningful way until 2014. Second, it is really Congress—the House and Senate—that makes change happen that impacts our lives (for better and for worse).
So the presidential election results themselves have very little impact on our personal financial plan, but the fact that the election is simply over means a great deal, especially over the next few months. There are a few camel-back-breaking straws lingering that are expected to develop further now that the world is no longer hypnotized by our presidential election.
Europe can go back to slipping into a continental depression, a slow-bleed that alone could send the remainder of the planet back into a recession. Many military and geo-political strategists predict a spike in the middle-east conflict du jour (most notably, the Israeli/Iranian struggle, but also further destabilization in Syria). But the big issue that sits right on our doorstep is the ominous “fiscal cliff.” This is not an imagined crisis. NOT arriving at a compromise before we celebrate the end of 2012 will result in a host of personal, corporate and governmental financial time bombs going off while we’re watching football and over-eating on New Year’s Day. (Yes, it also deserves mention that there are some bright signs peaking through the economic clouds that portend a rosier near future of growth in employment and housing, but the grimmer probability also appears to be the greater.)
What, then, can you do now that your civic duty is done? More than you would think, especially as the haze of political punditry and spin still clouds our vision, attempting to convince us that our futures are determined by those running, winning and losing. Yes, political self-interest and acrimony seems to have crippled the leaders we pay to govern, but WE are still—and will always be—the primary determinant of our personal financial success. And whether you are unemployed or a multi-millionaire, effective cash flow management is still—and will always be—the leading indicator of your future prosperity. Whether your country, state or municipality is blue or red, your income less your expenses is still your profit, and your assets minus your liabilities is still your net worth.
Now that the election is behind us, let’s control what we can, and disregard what we can’t.