Tune Out the Election Noise: History Shows Stocks Will Climb Regardless

Tune Out the Election Noise: History Shows Stocks Will Climb Regardless

I don’t spend much time poring over financial news. Almost none of it makes a difference with the trading strategies I follow and the recommendations I make for my readers.

But I’ll be honest: The front-page headline in The Wall Street Journal from last Friday really caught my attention.

Here it is in case you didn’t see it:

The Wall Street Journal - Stocks Typically Climb, Regardless of Who's in The White House

[ photo credit: screenshot from The Wall Street Journal, front page 10.23.2020 ]

I can’t believe I’m saying this: Whoever wrote this WSJ headline is absolutely right. Everyone can take a deep breath.

Every four years, there are loud noises coming from both sides of the political aisle…

None of it usually matters.

Stocks Always Go Higher

I remember one strategist (a really smart guy too – somebody I respect) saying that if Trump got elected in 2016, there would be a 20% selloff by December 2017. A lot of people thought that might happen.

It didn’t. The historic bull market continued:

Dow Jones Industrial Average October 23rd, 2020

There have been dips along the way – there always are. In fact, the biggest drop the markets have ever seen was earlier this year.

But did you notice what happened right after that massive plunge? Stocks went higher. Just like they always do.

So much at stake… But also, so little

I know there are a lot of opinions about who should be running the country right now. I’m aware of the problems. Like everyone else, I care about the future my grandkids will inherit.

I’m not going to sit here and pretend like there won’t be differences in the direction the country goes based on who wins the election. Of course there will be.

But that doesn’t mean I have to fret over the outcome of the election. Unlike a lot of people on TV and the radio, I’m optimistic about what’s next. I’m a pragmatist.

Don’t just take my word for it. Take it from the folks at WSJ – the same article that headline came from:

“The period between Election Day and Inauguration Day has been largely uneventful for the stock market. In 1968, 1976, 1980 and 1992—all elections that saw a new party win the White House—neither the S&P 500 nor the Dow Jones Industrial Average moved more than 3.2% in either direction.”

Here’s the reality: Some companies we’ve never heard of will be the new market darlings of 2021. Also, companies we’ve known for a long time will probably go under. It happens every year.

The bottom line is that the market will keep going up over time. When stocks go high, we’ll have a good idea of which ones will keep going higher.

It’s the beauty of following the signal and not the noise.

If you’re voting, make sure you have a safe plan for doing so. Trust me: We’ll be okay.


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