For those of you that are not familiar with Capital Group, home of American Funds, they have managed investment strategies though various funds for over 85 years to help clients achieve their investment objectives. They are one of the many tools and resources Excalibur uses when it comes to economic research. They also provide easy to read articles addressing market trends and statistics that we find clients enjoy to follow. Hopefully you find their “Guide to Election” piece below as interesting as we did.

With elections right around the corner, a question on many of our clients’ minds have been, “what should we do with our accounts in preparation for the election”. These questions and concerns have not only been with our clients, but investors all over the world. With these unknowns looming in our minds, we will share some statistics and facts regarding how markets react in elections years.

• U.S. stocks have trended up regardless of whether a Republican or Democrat won the White House. A $1,000 investment in the S&P 500 Index when FDR became president in 1933 would have been worth over $14 million today. During that time there have been seven Republican and seven Democratic presidents.
• Primary season tends to be volatile, but markets have bounced back strongly afterward. Stocks have returned 10.2% in the 12 months following primaries, compared to 5.8% in similar periods of non-election years.
• Investors often get nervous and move into cash during election years. Net asset flows into money market funds have been more than three times higher in election years than in non-election years.
• But staying on the sidelines has rarely paid off. It’s time, not timing, that matters most. Stocks have had negative returns in only two of the last 20 election years (2000, 2008), and both declines were largely attributed to asset price bubbles rather than politics.

To learn more about the effects of election years and investor’s behavior, please visit:
https://www.capitalgroup.com/advisor/insights/articles/3-investor-mistakes-election-year.html
On the right-hand side of that webpage, click on the blue download box: “Guide to investing in an election year”

Source: Huntington, C., Polak, D., Ward, S., Barrett, B., Wendt, G., Romo, M., & Jonsson, J. (n.d.). 3 mistakes investors make during election years. Retrieved September 17, 2020, from https://www.capitalgroup.com/advisor/insights/articles/3-investor-mistakes-election-year.html