There can be a lot of anxiety about our financial situations surrounding elections, particularly in such a divisive election year. Listening to the media often fuels our anxious behavior. However, a look through history may calm our fears. Review Vanguard’s data comparing portfolio returns during the election and non-election years and the election result impact to the markets.
In a volatile environment like the one we find ourselves in today, some investors want to take action just to take action. It can definitely make people feel better. But oftentimes in investing, that’s exactly the wrong thing to do.
Over the past fifty years, which spans most of our investing lifetimes, we have seen dramatic market declines. These occur about once a decade. In the 1970s, it was an oil crisis. In the 1980s, there was runaway inflation. In the 1990s, the tech bubble burst. In the 2000s, we had both 9/11 and the financial crisis of 2008. The 2010s were bookended by the European debt crisis in 2011 and market volatility in 2018. To begin the 2020s, the global markets have been shaken by the coronavirus.