Invest During an Election: Vote for Your Portfolio

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Invest During an Election Year: Vote for Your Portfolio

October, 2020

By: Jeff Headrick, Financial Advisor

Learning how to invest during an election year is a worth while pursuit. However, always bare in mind that investing is a long term endeavor.

I played a little baseball as a kid. I can still remember what it felt like to hit the ball on an cold spring day and have the aluminum bat send shock up to my elbows.

But I can also remember games in the summer where I saw my pitch coming  right down the middle, and how wonderful it felt to make a base hit. 

Invest During an Election: Keep Your Eye on the Ball

I remember a lot of yelling in baseball. Do this! Do that! Swing through! And most importantly, keep your eye on the ball! Whether I was running down a flyball or taking a swing at a fastball --one thing I was told repeatedly: Don't. Take. Your. Eye. Off. The. Ball.

In essence, investing in an election year is no different. We simply have to use the companies that we buy as a metaphor for the ball itself. During an election year, we are not buying presidents. We're not buying seats in the house or trying to win a particular electorate.

So, that's why during an election year it's more important than ever to keep your eye on the companies you buy.

Invest During an Election: The Companies You Keep

For example, when I look at Amazon, Microsoft, Tesla, United Health group, Samsung, Toyota, Nestle, and Apple, I do not see companies that are focused on the election.

I would dare say that most of these companies do not have a plan either way for whoever wins the election. So as investors, why should we?   

Furthermore, there should be a huge learning curve for investors during 2020. Here's why:

Investing in 2020: Tumultuous but Profitable to Investors

Our country hasn't been more polarized since the 1960s. In addition, we have had the worst pandemic that we've had in 100 years. Throw in a trade war with China and a contentious election, and you have a recipe for the perfect storm. Or, so you would think. 

Yet when we look at how Amazon, Microsoft, Tesla, United Health group, Samsung, Toyota, Nestle, and Apple have performed in 2020, you will see that they have done extremely well in aggregate.

As evidence, I can say this without pause because when I look at two or our largest equity positions ( VUG, GFFFX) I can see that they have positive returns during an election year. The top ten holdings in these funds are weighted towards the stocks mentioned earlier.  

Source: Y-Charts

Invest During an Election Year: What We've been Doing

In addition to providing daily support to our client's and their investments, we've been exploring more investments and financial planning topics.

We are intrigued by the following:

  • Commodities
  • Faith based funds: See how BIBL has done this year)
  • Technology funds
  • How to create the ultimate annual review experience

In addition, we've been helping clients invest more assets during an election year, not less. Ever heard of dollar cost averaging?

And, when it comes to managing risk, we have made sure we are analyzing our clients long term care plans, life insurance, and disability insurance.

All of these are highly important especially during times of rising unemployment.

Invest During an Election Year: Time to Focus

This election year, keep your eye on the ball. Don't let the political rhetoric cloud your desire to become a great investor.

Great investors focus on companies, not candidates.

Related:

Three Mistakes Investors Make During an Election Year

 

About the Author

Jeff Headrick is an independent financial planner and wealth manager with Inspire Financial Planning. When Jeff was still in his teens his father died unexpectedly. While his father was a hard worker and a good provider, he did not have the best financial plan in place when he died. This left his family at a difficult  financial crossroad. This personal experience, coupled with being inspired by Sir John Templeton, Warren Buffett, Dave Ramsey, and the laws of compound interest, prompted Jeff to enter the financial services industry in 1999. He has been helping people with their financial planning ever since. Jeff lives in Wilmington, NC with his wife and two children. He spends most of his spare time just across the Intracoastal Waterway in Wrightsville Beach, enjoying the beauty of the NC Coast.

Charts and graphs contained herein should not serve as the sole determining factor for making investment decisions. All hypothetical scenarios are for illustrative purposes only. Investment Advisory Services offered through AlphaStar Capital Management, LLC a SEC Registered Investment Adviser. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the adviser has attained a particular level of skill or ability. Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. Diversification does not guarantee profit nor is it guaranteed to protect assets. International investing involves special risks such as currency fluctuation and political instability and may not be suitable for all investors. Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance. Past performance does not guarantee future results.

You cannot invest directly in an index. Consult your financial professional before making any investment decision. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.

These are the views of Inspire Financial Planning and not necessarily those of AlphaStar Capital Management, LLC, and should not be construed as investment advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.