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Forbes.com: 5 Tips for Successfully Investing During Election Season

Forbes.com: 5 Tips for Successfully Investing During Election Season
(Dollar Photo Club)

By    |   Tuesday, 24 May 2016 10:07 AM

Some financial experts believe the fate of the U.S. stock market hinges on the presidential election.

According to CNN, since 1945, the average annual stock market gain under a Democratic president is 9.7 percent. Under a Republican president, it’s only been 6.7 percent.

“The truth is that the stock market is always volatile, no matter who is in the lead — Democrat, Republican, Independent or otherwise,” Elle Kaplan, CEO and Founding Partner of LexION Capital Management, a wealth-management firm with ethical and transparent asset management services, wrote for Forbes.com.

“We just happen to notice it when the market is down or when the election is coming up. Through smart investing and a long-term perspective, you’ll win either way in the election.”

She offered five tips for such a volatile election season:

  • Avoid market timing. “It’s almost impossible to time the markets correctly,” she said. She said Morningstar found that investors lose 2.5 percent of their returns every year on average when they try to exit or enter strategically to outsmart the market.
  • Keep focused on finish line. Since 1926, it has taken an average of 3.3 years for stocks to reach a new high after a bear market, according to The Wall Street Journal. "By looking toward your future objectives that are quite further down the line, like retirement, you can maintain a cool head and the right perspective for your goals. Quite simply, if you have an investment aimed for years down the line, your best option may be to stay put and weather the storm,” she wrote.
  • We aren't alone. “As much as the president would like to believe he or she affects everything in the world, they aren’t in a vacuum. Everything from global currency prices to foreign oil affects the stock market, not just the president,” she said.
  • Diversify globally. “Despite global effects on the U.S. market, global investors get to enjoy the benefits of occasional opposite performance on a larger scale. International markets may be up while U.S. markets may be down and vice versa. In times of increased volatility, this can allow you to better weather the ups and downs in order to successfully invest your wealth for the long-term.”
  • Tolerate as much risk as you want. “Your portfolio should reflect your appetite for risk. Unfortunately, the presidential election isn’t the only event that will cause anxiety about the stock market. Rather than making a rash decision or selling out of your investments, adjust your portfolio to small degrees to comfortably ride out any uncertainty. Speak with your financial advisor or allocate an even greater portion of your portfolio into low-volatility assets (like bonds).”
For one, Warren Buffett, chairman and chief executive officer of Berkshire Hathaway Inc, has said a Trump presidency wouldn’t be the blow to U.S. business that some fear, Bloomberg reported.

“If either Donald Trump or Hillary Clinton becomes president, and one of them is very likely to be, I think Berkshire will continue to do fine,” Buffett, 85, said at the company’s annual shareholders meeting in Omaha, Nebraska.

The outcome of November’s presidential election is unlikely to change the fact that the U.S. is a “remarkably attractive place in which to conduct a business,” said Buffett, who endorsed Democrat Clinton at an Omaha rally in December. U.S. companies have enjoyed “terrific” returns on equity despite a sustained period of ultra-low interest rates, he added.

Buffett, who has criticized Trump in the past and scorned politicians’ pessimism about the country, looked past the current voter angst for a longer view of U.S. economic prospects.

‘Far More’

“Twenty years from now, there’ll be far more output per capita in the United States in real terms than there is now. In 50 years, it’ll be far more,” Buffett said. “No presidential candidate or president is going to end that. They can shape it in ways that are good or bad, but they can’t end it.”

Asked how a Trump presidency might affect Berkshire’s business, Buffett replied, “That won’t be the main problem.” He didn’t elaborate.

(Newsmax wire services contributed to this report).

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Some financial experts believe the fate of the U.S. stock market hinges on the presidential election.
forbes, tips, invest, election
Tuesday, 24 May 2016 10:07 AM
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