The presidential primaries are in full force with Donald Trump and Hilary Clinton looking like they will receive their respective party’s nominations. I’m going to go out on a limb and say, nothing is decided yet, at the beginning of March. But, don’t hold me to it, as it’s still early, and with Mitt Romney betting against Trump, anything is possible.
With an election coming up, if you’re voting with your investment portfolio, is it better to vote Republican or Democrat? There’s a lot written about how your investments will perform under a particular political party. A Daily Finance article by Brian Lund entitled, “Presidents: Which Are Better for the Stock Market?” did the heavy lifting and interpreted a study on that topic by CMCMarkets.
“On the whole, the stock market has performed better under Democratic presidents than under Republicans. Much, much better. The average monthly return under Democrats was 0.73 percent versus 0.38 percent for Republicans, and Democrats posted an average yearly return of 15.31 percent against 5.47 percent for their political counterparts.”
It may look like a done deal, but it turns out that there’s no easy answer to whether the Republicans or Democrats are best for your investment portfolio, in spite of the previous data. One problem with the study was that it used the DOW Jones Industrial Average, a very narrow index, to represent the stock market. In actuality, the president’s political party doesn’t drive the investment markets (I might add that if any governmental office impacts the markets, it might be the Fed and/or Congress). Nor is the presidents solely responsible for the economy or the stock market.
Stock market changes are impacted by changes in corporate profits which are influenced by individual company results as well as broader macro-economic conditions such as wars, taxation, and interest rates. So, don’t worry about how your vote will affect your investment portfolio! Just vote for the candidate you think will be best for the country!
Best Money and Investing Reads:
Oblivious Investor, by Mike Piper, “Politics and Investing Don’t Mix“
Morningstar, Rekenthaler Report, “Index Funds: Presumed Guilty, But Probably Innocent“
Business Insider, Jim Wang at Credit.com, “10 Fees Smart People Don’t Pay“
Money Under 30, by Lauren Barret, “Why Stock Market Volatility May Be Good For You“
The Reformed Broker, by Josh Brown, “My Super Tuesday Reaction“
Crossing Wall Street, by Eddie Elfenbein, “The Elfenbein Theory to Explain Wall Street“
A Wealth of Coomon Sense, by Ben Carlson, “Is the Fed Running Out of Ammo?“
LinkedIn Pulse, by Liz Claman, “The Letter of Buffett’s Law“
Dividend Growth Investor, “What Dividend Cuts? What Market Correction?“
My Stock Market Basics, by Joseph Hogue, “Why I Don’t Worry About a Stock Market Crash”
NYU School of Professional Studies has a great course for anyone interested in learning “The Fundamentals of Value Investing” taught by James Berman.
My Recent Money and Investing Articles + Podcast Appearances:
GoBanking Rates:
8 Dangerous Tax Mistakes
How To Invest Your Money When You’re Afraid of Risk
Investopedia:
Will Baby Boomers Bankrupt Social Security?
Knowing When It’s Time to Switch to a Robo-Advisor
AboutLife:
Keep Your Retirement Dream From Turning Into a Nightmare
Captain401:
Characteristics of a Top 401k Plan for Employers and Employees
Stacking Benjamins Podcast
Graham Bell of Debt Round Up and I are having a fintech baby: RoboAdvisorPros
If you’re interested in finding out whether a Robo Advisor is for you, then stop by and see the baby !
