What to expect with the US Election?

Sebastien Chevrier - Nov 03, 2020
While the US elects a new president, we wanted to take the time to briefly discuss what all of this recent news means in the context of your long-term investments.

With all that’s been taking place in the world, including renewed COVID-19 lockdowns and a U.S. presidential election, you can be forgiven for being unaware that it is also Financial Literacy Month. With this in mind, we will be sharing regular financial posts on both our blog and Twitter over the coming weeks, so don’t forget to check back often!

For now, we wanted to take the time to briefly discuss what all of this recent news means in the context of your long-term investments. Specifically, we wanted to use some historical data to demonstrate that no matter how much a story may dominate the headlines, the market’s resilience over the long-run has been proven time and time again.

As we look beyond the result of the election, we want to use the chart below as a reminder that regardless of the outcome, in the year following a U.S. President’s inauguration, the S&P/TSX has typically moved higher.

 

 

This is not to say that we can accurately predict what the 14 months after this election will bring, but it does serve to make a valid point: No matter how uncertain we may be regarding how the future will look, it is only by sticking to a carefully crafted, long-term plan that we are able to smooth out these times of uncertainty, ultimately bringing us closer to achieving the goals we first set out to reach.
With our neighbors to the south choosing their leader for the next four years just as the second wave of COVID-19 takes hold across large swaths of the world, markets may act unsurprisingly jittery. However, as we discovered at the onset of this pandemic, it is vital not to use short-term market behavior as a barometer for long-term performance.

Particularly during times of heightened uncertainty, headlines will be dominated by fearful terminology, and it is easy to conflate this rush of negative news stories with our personal view on investments. However, basing our decision-making on emotion, contrary to the long-term plan that we have built, is never helpful, and can in fact be quite harmful to reaching our financial goals. At times like these, it is important to keep data like the chart above in mind. You should also never hesitate to reach out to us for an objective view on how to maintain a steady financial hand in such a unique environment.

 

Image Courtesy: Bloomberg.com