What to Expect from the Stock Market Before and After the Election

Politics and finances—two parts of our lives that can incite the most worry. So, it’s no surprise that investors are trying to find the correlation between election years and stock market trends. We want to help ease your fears and your pre-election jitters. In this article, we’re sharing insight into what you may expect from the coming months. However, keep in mind that we cannot predict the future—we can only review the history to get a sense of potential trends.

Leading Up to the Election: Potential Volatility Due to Uncertainty

The stock market does not handle uncertainty well. Moving toward the possibility of a new president has created a volatile market in the past, as a change in the White House could mean changes in taxes, regulations, and other elements that dramatically affect our businesses and economy. 

The three months leading up to an election are when we typically see the most volatility. We attempt to determine trends based on this data; however, although it seems that the market is shaky down during this time, analysts find that the trends are relatively inconsistent. There is little to no evidence that a presidential race will have a dramatic, lasting effect on the market when we look at the big picture.

Following the Election: Expect a Brief Drop

The day after a presidential election has frequently shown a drop in the market. This trend is not surprising, as the possibility of a new president—or an incumbent president’s new promises—can cause investors to hesitate. However, the first day of a President’s new term, or even the first year, is not an indicator of future performance. 

You must be patient and trust that your patience will be rewarded. When you’re feeling worried, remember the Warren Buffett quote, “Do not take yearly results too seriously. Instead, focus on four or five-year averages.” In short, stay calm. 

Political Trends Should Not Determine Your Investment Strategy

As for the 2020 election, many suspect that the recent market drops are related to the uncertainty surrounding the upcoming race between Trump and Biden. But should that determine your investment strategy? Our advisors say, “Absolutely not.”

So, why are we sharing this with you in the first place if Election Day should not affect your investment strategy? Because it’s important to be aware of normal trends and market volatility surrounding political changes so that you can be comfortable with your investment plan even as the market rises and falls—avoiding panic at all costs. 

Your advisor can help you determine the best moves to make based on your income, age, goals, and many other factors. But, by all means, do not let aggressive political headlines scare you into changing course. Selling out of panic is not a strategy, and it’s likely that this move will not offer you the results you’re looking for in the long run. 

Talk with your Southwestern Investment Group advisor about potential changes to your portfolio, as they can help you put emotions such as fear and worry aside when discussing your financial future. 

Are you suffering from financial worry this election year? Contact us today to schedule a consultation.

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Jeffrey T. Dobyns


President, SageSpring | Financial Advisor, RJFS 

Jeffrey T. Dobyns

President, SageSpring | Financial Advisor, RJFS

Beyond crunching numbers and investment strategies, at SageSpring, we’re about building relationships. When you encounter Founder & President of SageSpring, Jeff Dobyns, it’s easy to understand why this is at the very heart of who we are as a firm. You won’t find stuffy formalities with Jeff; instead, you can expect to find him sharing a warm smile, communicating a compelling vision, or patiently untangling life’s complex challenges with clients. He believes in truly getting to know clients, understanding their aspirations and priorities, and navigating their financial plans with a tailored, comprehensive approach. Our team members have often been caught taking notes on Jeff’s effortless relationship skills from a distance, and we admire them for striving to learn from one of the best. 

Jeff’s financial expertise and wisdom are the perfect match to his innate people skills. Jeff holds the prestigious CERTIFIED FINANCIAL PLANNERTM certification, Chartered Life Underwriter (CLU®), and Chartered Financial Consultant (ChLU®) designations, and has held executive positions with financial planning firms for more than two decades. 

His dedication extends beyond the office to the boardroom and the local community, where Jeff is passionate about giving back. He serves as Chairman of the Board of Men of Valor, a prison ministry and mentoring program. Jeff also serves on the board of Send Musicians to Prison, which shares hope, healing and restoration with the imprisoned through musicians & artists. Jeff actively supports other initiatives in the community by sitting on the board of The Signatry of Middle Tennessee and the Halftime Institute of Nashville. 

Witnessing his four children, Gracyn, Hunter, Tanner, and Logan, excel on the field is almost just as rewarding, if not more, than celebrating the victories of seeing his clients overcome obstacles and build wealth. Spending weekends boating on the lake, hiking mountain trails, and fishing with his family are the moments Jeff cherishes most. It’s this grounded perspective that reveals the true meaning of wealth for Jeff: not just numbers on a page, but the freedom to create experiences that enrich your life and the lives of those you love. When you choose the Dobyns McMillin Wealth Team, you choose more than financial expertise. You choose a partner who champions your dreams, celebrates your victories, and walks besides you on the path to achieving your unique goals.

**Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER TM, CFP® (with plaque design) and CFP® (with flame design) in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.