Introduction: A Common Concern for Investors

As elections and political events unfold, it’s natural for investors to question how these changes may affect their financial future. At Suttle Crossland Wealth Advisors, we often receive questions about market volatility related to political shifts. Whether it’s an election cycle or major policy announcements, many believe political events significantly impact the market. However, history tells us a different story—one that reminds us to focus on the long-term rather than short-term political news.

In this post, we’ll explore how markets historically react to political changes, why you should avoid knee-jerk reactions, and how Suttle Crossland helps clients stay focused on their financial goals.

Politics and Markets: A Historical Perspective

The relationship between political events and market performance has been extensively studied, yet the results may surprise many. Data shows that while elections can create temporary volatility, the long-term impact of political control on the market is minimal. Markets are driven by a wide array of factors, most of which are unrelated to who is in power.

According to Dimensional Fund Advisors, markets have performed well under both Democratic and Republican leadership, with no clear long-term advantage for either party. The conclusion is clear: reacting to political events in the short term doesn’t offer a reliable strategy for long-term growth.

For more on this, you can read Dimensional’s full research in their article, “Bulls, Bears, and Ballots: When Looking at Politics and Markets, Think Long Term.”

Additionally, Vanguard’s analysis backs up this perspective. Their research on presidential elections shows that while elections can grab headlines, they don’t typically drive lasting change in market performance. In fact, Vanguard suggests that long-term investors should look past elections and stick to their strategies. You can dive deeper into their findings in their article, “Presidential Elections Matter, But Not So Much When It Comes to Your Investments.”

Key Lessons from Political Market Trends

1. Short-Term Uncertainty Doesn’t Dictate Long-Term Results: Election years often bring more market volatility, but this is short-lived. While it may seem like political events dominate market movements, other factors such as global trade, technological innovation, and overall economic health tend to play a more substantial role over time.
2. Political Promises vs. Economic Reality: While campaign promises make headlines, the reality is that economic policies take time to be implemented and often don’t have immediate effects. Furthermore, markets are complex and respond to much more than just political actions. Policies can take years to impact corporate profits or consumer behavior, meaning their short-term effect on the market is limited.
3. Diversification Still Rules: One of the best ways to protect against political risk is through a diversified portfolio. A well-diversified mix of assets can help investors weather market turbulence, regardless of political outcomes. At Suttle Crossland, we take a personalized approach to portfolio design, helping clients build strategies that can adapt to market fluctuations over time.

The Pitfalls of Timing the Market Based on Politics

Attempting to time the market in reaction to political news can be a costly mistake. As both Dimensional and Vanguard point out, missing just a few of the market’s best days—often following its worst days—can dramatically reduce your overall returns.

For example, if you pull out of the market in anticipation of a political shift and miss a subsequent market rally, your portfolio’s growth potential could be significantly diminished. Historical data repeatedly shows that markets tend to rebound after periods of uncertainty. The key is to stay invested through the ups and downs.

Why Long-Term Thinking Is Crucial

Rather than reacting emotionally to short-term political changes, it’s better to think long-term. Dimensional’s research demonstrates that long-term investors generally see better returns by staying the course, even through periods of heightened political uncertainty.

Vanguard’s data reinforces this by showing that despite the short-term impact elections may have, long-term investors who remain steady tend to fare better. Their article highlights that investment performance depends more on sound financial principles—such as diversification and risk tolerance—than on which political party is in power.

How Suttle Crossland Helps Clients Navigate Volatility

At Suttle Crossland, we understand that political events can stir concern, but we believe in keeping our focus on the fundamentals. Our approach to financial planning is built on helping clients stick to their long-term goals, regardless of short-term noise. Here’s how we support you:

1. Tailored Strategies for Your Needs: Every client’s situation is unique, and we take the time to design investment strategies that reflect your goals, risk tolerance, and timeline. Our diversified portfolios are built with various market conditions in mind.
2. Ongoing Monitoring and Adjustments: The market is always evolving, and we stay vigilant, regularly reviewing your financial plan. If your circumstances change, we adjust your strategy accordingly, always with your long-term objectives in mind.
3. Education and Clear Communication: We know that staying informed can help reduce the temptation to react to short-term market swings. That’s why we keep our clients up to date with relevant insights and data, allowing you to make informed decisions.

Stay the Course: Focus on Long-Term Success

Political events will come and go, but your financial goals remain the priority. While it’s natural to feel anxious during election seasons or when there’s significant political news, it’s important to remember that reacting hastily can lead to missed opportunities.

Both Dimensional and Vanguard’s research affirm that markets have weathered countless political transitions and will continue to do so. The best course of action is to stay invested, diversify your holdings, and remain focused on your financial goals.

To explore Dimensional’s full analysis, you can read their article, “Bulls, Bears, and Ballots: When Looking at Politics and Markets, Think Long Term,” or for more insights from Vanguard, check out their article, “Presidential Elections Matter, But Not So Much When It Comes to Your Investments.”

How Suttle Crossland Can Help You Stay on Track

If you’re concerned about how political events might impact your financial future, we’re here to provide guidance. At Suttle Crossland, we work with clients to create personalized strategies designed to help you reach your goals, regardless of the current political landscape.

Contact us today to set up a consultation, and let’s discuss how we can help you stay focused on the big picture.