2 Points on Politics

As the election approaches, here are two items we remind ourselves of when it comes to politics and investing.

(1) Over time, the market goes up under both Democrat and Republican Presidents. Both parties have experienced their share of volatility, from corrections and pullbacks to generational bear markets. But when we look at the long-term, regardless of who is in power, the market has moved higher.

If you had been a real partisan and moved your account out of the market when your party wasn’t in power, you would have earned a fraction of the market’s return. $1,000 invested in the S&P 500 in December 1953 would have turned into nearly $225,000 today (price only, this does not account for dividends). If you were a Democrat and only invested under Democrat Presidents, or a Republican only investing under Republican Presidents, either way, that $1,000 investment in 1953 would be less than $25,000 today, or less than one-ninth of what you would have earned had you invested over the full period. Never unnecessarily interrupt the power of compounding - this is one of our core tenets when it comes to investing. And partisan politics is an unnecessary interruption.

(2) It may be the market that influences politics, not the other way around. If we look at every Presidential Election back to 1928 (24 elections, not including the current one), the S&P 500’s performance in the 90 days leading up to the election has predicted the outcome 83% of the time. When the market is up in the 90 days leading up to the election, the incumbent party usually wins. When the market falls leading up to the election, the challenging party is favored.

People vote their pocketbooks. So as the election approaches, you may want to watch the market instead of the polls.

If you have any questions about your account(s), if there has been a change in your financial situation or investment objectives, or if you’d like to schedule a complimentary consultation to learn more about how our team can help you navigate the market and achieve your long-term financial goals, please feel free to contact us at (406) 839-2037.

Data Sources: Koyfin, S&P Global, Allied Calculations

The views expressed in this newsletter represent the opinion of Allied Investment Advisors, a Registered Investment Adviser. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment or services. The information provided herein is obtained from sources believed to be reliable, but no representation or warranty is made as to its accuracy or completeness. Investing in equity securities involves risks, including the potential loss of principal. While equities may offer the potential for greater long-term growth than most debt securities, they generally have higher volatility. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles, or from economic or political instability in other nations. Past performance is not indicative of future results. Investments are not a deposit of or guaranteed by a bank or any bank affiliate. Please notify Allied Investment Advisors if there have been any changes to your financial situation or investment objectives or if you wish to impose or modify any reasonable restrictions on the management of your accounts through Allied Investment Advisors.