Q: What’s the single most important mistake investors make during an election year?
A: Before answering that question, it’s critical to keep one thought in mind: According to Capital Group/American Funds, “Over the long term, going as far back as the 1930s, U.S. stocks have nearly always been higher at the end of a president’s term in office than they were at the beginning, regardless of party affiliation. Stocks have moved higher no matter which party won the White House.” In other words, don’t let politics sway your investment choices.
With that being said, sitting on the sidelines and taking a “wait and see” position is rarely a winning investment strategy during an election. The mistake of moving to cash could prevent you from reaping any growth potential. People who stayed invested, had better long-term results than those who opted for cash. Yes, there will be a lot of uncertainty during 2024 and the markets hate uncertainly, but we recommend riding it out and stay the course. Stay true to your long-term financial objectives and don’t let a short-term event derail your strategy.
Remember, it’s time in the market, not timing the market.