Would you like to know what presidential elections and Harry Potter have in common? Stick around and I'll tell you.
Another presidential election year came and went. And to say it was no ordinary election year is an understatement. There were so many variables at play it was, for most, highly emotional and unpredictable, especially around health and finances. But this was not the first election cycle to be fraught with uncertainty and chaos, and so, the question remains, how DO presidential elections impact your financial objectives?
There are so many areas this topic of conversation can cover such as the cost of healthcare, prescription drugs, taxes, and immigration just to name a few. And although each of these topics may have its impact on the economy and your specific situation, we'll only be sharing a bird's eye view on how presidential elections may impact financial markets and your portfolio and reveal what they may have in common with Mr. Potter.
Here are some interesting facts and patterns:
1. According to the Stock Trader's Almanac, since WWII, stock markets posted better average returns under democratic presidents.
2. According to research by Marshal D. Nickels EdD, during the entire 20th century, every mid-decade year that ended in a '5' ( for example 1905, 1915, 1925, etc.) was profitable.
3. Best SP500 election year return was 1928 with 43.6%, and we know what happened the following year, and the worst was 2008 with a negative 37%.
Are you yawning yet?
In her article for THE BALANCE, Dana Aspach said it best: The problem with investing based on such data patterns is that it's not a sound way to go about making investment decisions. It sounds exciting, and it fulfills this deep-seated belief that many people have that there's a way to "beat the market", and someone out there knows how to do it. I tend to agree with this perspective and not only around presidential elections.
Warren Buffet famously said, "The biggest risk is not knowing what you're doing", and if you attempt to approach your financial objectives without either knowing what you're doing or hiring someone who does then neither Tarot cards, astrological constellation patterns, online electoral polls, or Harry Potter's "Wingardium Leviosa" will have the desired impact on your financial objectives or the elections, as will your vote.
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