We have had 58 presidential elections going back to 1789 in the United States.  So every 4 years, the election cliché’s get dusted off.  “This is the most important election ever.  This time it’s different.  Our fates lie on this election.”  And it’s a pretty safe bet that between now and November, the rhetoric will crank up higher and higher.

So it is very natural to wonder if selling all your stocks now, and just “buy ‘em back after the election” is a good idea. 

How would such a strategy have fared historically?  Not very well. Because since 1928, on average stocks have done better during election years than non-election years.  So being out of stocks during election years would have cost an investor an average of 2.5%/year in lower returns compared to just muscling through.  (source:  Bespoke, Inc.)

Not every election year is an up year, of course.  Of the 23 presidential elections since 1926, four of them were down years for stocks; 1932, 1940, 2000 and 2008.  (source: Stock Trader’s Almanac)  But betting that an election year will be a down year is like putting all your money on the weakest college basketball team in the March Madness tournament.  You could win, but most of the time you will not.

If someone you care about needs help with their financial planning or portfolio management, have them contact me.  I will help them.

Have a great rest of the week.