Investing and politics do not mix well

Over time I have seen people lose a tremendous amount of money due to U.S. presidential elections. Convinced of a particular viewpoint and eventual outcome, they place bets on the stock market, sometimes incurring capital gains taxes if selling prior to an election.

It's a terrible idea.

The political-financial thesis that an investor espouses might be correct, but even if it is, it might not be a dominant driver. There is 1. No way to know if the thesis is correct in advance and 2. Really no way to know where it stands in the order of priority. These two problems are compounded by the fact that for most people, elections are emotional and they see their own values reflected in the outcome. It's a potent cocktail of error.

Markets dislike uncertainty, and close elections, particularly one where there may be a contested result, are not going to give the market giggles. In theory, once an election is over, the market, shall we say, "appreciates the stability."

Financially speaking, this fall parties will resort to familiar themes regarding stock market performance. Republicans will say they are better for the economy, jobs, and the stock market. Democrats will counter with the fact that the stock market has, since WWII, done better under Democratic presidents. (Democrats won't mention that the start and end dates matter a lot - for example decisions made by George H.W. Bush may have contributed to the Clinton boom.) Republicans will counter that control of Congress matters in the equation.

As a Vermonter, I feel compelled to point out that since 1923, our native, frugal Calvin Coolidge trounced every other president, by far, at 26.1% returns on the Dow *per year*1.

I don't love political parties, because their incentive is to perpetuate themselves in addition to, and sometimes rather than, serve the nation. As an example, Democrats and Republicans formed a corporation to control access to debates, restricting third-party candidates who might have new ideas 2. Duopolies will always favor themselves, whether in business or in politics.

Try to keep the investing and politics in separate mental buckets. Some things shouldn't mix.

Dan Cunningham

1Calvin Coolidge. The Best and Worst Presidents. Kiplinger 8/4/20.

2Commission on Presidential Debates

Return to Articles
How We Are Different
Low-fee index funds. Transparent & fiduciary financial advisors.
Local Financial Advisor
We are in your community. We are local.
Investment Management
We tailor to each client. Index funds at the core.
Index Funds
Broad market exposure, low expense.
Dan's Corner
Meaningful musings from our founder.
Fiduciary
Your best interests are our priority.
Low Fees
Our fees are among the lowest in the nation.
Financial Planner
Financial advisor optimizes your financial picture.
U.S. Treasury Bonds
Use Treasury Bonds to reduce risk.
Book Recommendations
Here are some of our favorites
Who We Serve
We work with clients nationwide from all financial backgrounds.
When Should I Invest?
Life transitions = important financial decisions.
Retirement: 401k and More
Retiring? Plan the future you want.
IRA Rollovers
401k Rollovers. IRA Rollovers
Active vs. Passive Investing
We believe there is a winner in this debate.
The Investment Process
How we work: low-cost index funds, personalized attention.
Simplicity
Simplicity is the ultimate sophistication.
Investing: What to Focus On
Low-fee index funds. fee-only advisor.
Switching Financial Advisors
Can be uncomfortable, but an important step.
Advisor Recruiting
We attract top-tier talent. Not your usual firm.
Basic Investing
Let's start with Investing 101.
Understanding Your Financial Statement
Let's break it down to basics.
Taxes on Investments
What causes taxes within your investments?
Behavioral Finance
Nudge vs. Sludge.
Timing the Market in 2020
2020 - a case study in the futility of market timing.
How Financial Firms Bill
Fee-based vs. fee-only, and lots more.
Who Supports Indexing?
Bogle, Swensen, Buffett, and others.
Transparency
One click to see our fees.
Mutual Funds vs ETFs
Clarifying the difference.
Does Stock Picking Work?
The research says no.
Countering Arguments Against Index Funds
What happens in a down market?
Annuities
Lots of fees, little clarity.
How Do Mutual Funds Work?
Invest in the basket.
How to Relieve Financial Stress
New client? anxiety is normal.
Financial Terms Glossary
Common investment terms you should know.
Firm Comparison
One Day In July vs the competition.
Retired Investing
Retiring? Let us help.
Accounts We Manage
We manage a wide range of investment account types.
High Net Worth Investors
Preserve and grow your wealth.
Investing an Inheritance
Prioritizing and planning for the future.
Frequently Asked Questions
Good questions, real answers.
Female Investors
Your voice needs to be heard. We are listening.
For the Business Owner
Choosing what's best for your business.
Environmental Investing
Carbon intensity, fossil fuels.

Locations

Vermont

Connecticut

United States

Services

Individuals

401k Plans

Institutions

Environmental

Account Types

Differentiators

Cash Flows

Low Fees

Fiduciary

Dedicated Advisor

Materials

Advisors: Join Us

Careers

Articles on Investing

About the Secure Act

Quarterly Booklets

Resources

Vermont Investment Management

Vermont Retirement Planning

Vermont Wealth Management

Vermont Financial Advisors

Investment Tools

In the Media

Shelburne, VT Financial Advisor

Frank Koster | Josh Kruk | Keith McCarthy

5247 Shelburne Rd, Suite #101

Shelburne, VT 05482

(802) 777-9768

Stowe, VT Finanical Advisor

Available for meetings in Stowe.

Peter Egolf

(802) 999-2321

Burlington, VT Financial Advisor

Hans Smith | Katie Muttitt

Nancy Westbrook | Peter Egolf

77 College Street #3A

Burlington, VT 05401

(802) 503-8280

Darien, CT Financial Advisor

Available for meetings in Darien.

Keith McCarthy

(203) 554-9466


v 1.7.44 | © One Day In July LLC. All Rights Reserved.