The 2016 election is shaping up to be historic, similar to the 57 previous ones we’ve had going back to 1789. People are wondering what a Hillary or Trump presidency might mean for their money. They’re also wondering whether we’ll see a pickup in stock market volatility as we approach November 8th. Volatility will pick up, but it won’t have anything to do with the election. The VIX is currently lower than 93% of all days going back to 1990. Stocks also aren’t moving very much right now; it’s been 29 days since the S&P 500 moved 1%. It’s hard to see volatility going anywhere but up.
The average stock market return during a presidential year is 11.2% and the median is 13.5%. Of the 22 presidential elections since 1926, stocks were down in 4 of those years; 1932, 1940, 2000 and 2008. If you think the election had caused the Great Depression, the dot-com bubble or the great recession, there’s no need to continue reading.
With stocks near all-time highs, you’re probably sitting on some gains. And if you’re comfortable paying taxes because of a hunch, you probably don’t have a great plan for getting back in. That’s because you’d be letting your emotions drive decisions.
Stocks might fall before, during or after the election because that chance always exists with risk assets. But really, if you’re letting politics interfere with your retirement I have two suggestions; let somebody else manage your money or plan on working a few more years.