Hi Reader ,

Have you watched the movie Rajneeti starring Ranbir Kapoor, Katrina Kaif, and Ajay Devgn?
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It was released in 2010 but still is an evergreen “political” movie, IMO. Incessant bloodshed, broken family dynamics, and power-hungry men—all combined made for a fascinating thriller.

What I took away from the politics of it all was that everyone was constantly trying to gain the upper hand, and each revenge led to long-term losses, leaving all the parties worse off than before.

As the US goes to the polls on November 5, 2024, there is palpable tension simmering in the air (and I can’t stop thinking about rewatching Rajneeti). It’s natural for investors to look for a connection between who sits at the White House and which way stocks will go. But I do sense underlying FOMO, especially with H1B visa folks who are not allowed to vote. It stems from them wanting to make the most of the situation and having some “feeling of control,” but...

One word of advice: don’t try to gain an upper hand with your investments, or you will be worse off.

I say that because every election year, my inbox is flooded with genuine queries like, “How can I change my investments based on the upcoming elections?”

So in this newsletter, let’s tackle that head-on.

Don’t Get Political With Your Money

It’s important to not be “political with your money.” This means not getting swayed by your political beliefs, the political currents in the country, or who becomes the President, when it comes to your finances.

Take these three investors for example:

1. Investor 1 put in $1,000 in the stock market only when a Republican was President beginning in 1953. Their money would be worth $27,400 today.
2. Investor 2 put in $1,000 in the stock market only when a Democrat was President, again starting from 1953. Their money would be worth double that, so $61,800 today.
3. Investor 3 invested $1,000 for the same period, regardless of who was in the White House, and stayed invested while keeping their politics aside. Their money would be worth $1.6 million today.

Here’s a visual representation of these three investors and their investments.

The history of the stock market going back to 1926 shows that returns in months when presidential elections took place don’t reflect any consistent patterns. Clearly, the winning party hasn’t been a reliable indicator for the direction or magnitude of market movements in election months.
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So if I were you, I’d be the third investor any day and save the unnecessary jitters. But for those of you who love data and rationale, here’s more.

Digging Deep Into the Why

Of course, elections lead to market volatility. Up and Downs. Bulls and Bears. More Ups and Downs. But this is in the short term. Regardless of who wins, nearly a century of returns show that stocks have trended upward. That’s the long-term game I am talking about.

How am I so sure that you are better off in the long run?

1. Historically, markets have risen in election years

Since 1950, US stocks have averaged returns of 9.1% in election years, according to research by Fidelity. That said, past performance is no guarantee of future returns. Mostly, election months themselves haven’t produced extreme returns in one direction or the other. So if anyone is telling you to buy or sell, just ignore it.

2. Markets are nonpartisan

Markets are not biased or partisan, especially towards any particular political group. Although news channels and theorists sometimes suggest that one party or the other is “better” for market returns, the historical data does not bear out these theories. As we saw in the three investors example, markets gave the highest return to the long-term investor.

3. Markets piggyback economic growth in the long-term

Well, it’s Investing 101. In short, stock market growth is directly tied to economic growth. Shareholders, like you and me, invest in companies that focus on serving their customers and growing their businesses, regardless of who is in the White House.

Sure, US presidents may have an impact on market returns, but so do many other factors—the actions of foreign leaders, interest rate changes, changing oil prices, and technological advances, just to name a few. Do we keep buying and selling every time one factor stirs the market? If you are a long-term investor then, a big NO. (If you are a trader, take your bets, who’s stopping you anyway?)​
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Let’s take a look at the hypothetical growth of $1 invested in the S&P 500 from 1926 to 2023 throughout various Presidencies.
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So, the history of market behavior during election months makes a strong case for sticking with a plan to achieve long-term goals.

Since investment strategies are created to lock in for 5-10 years, the best way to make money is to stay invested even when you think there might be turbulence. If you feel like the market is dropping, it may even be a buying opportunity!

One final and friendly reminder that I will keep iterating even on my deathbed (I am that serious):

A strategy for successful investing is:

• Focus on what you can control
• Let your emotions take a backseat
• Stick to the financial plan you (and your advisor) put in place.

When you maintain perspective, discipline, and a long-term outlook, you can sustain progress toward your financial goals. That’s all, folks!

That’s all for today.

See you in two weeks!

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​P.S: Before you move on to the buzz of Instagram reels, feel free to ping me your burning questions. I will respond on my weekly Ask-Me-Anything Fridays on LinkedIn.

Fun Corners of the Internet

• Rajnikanth fever is back with Vettiyan. It released worldwide on October 10. Have you watched it yet? If yes, tell me your review before I go and watch it at the cinema.
• ​Watch Priyanka, legit an uber-cool DJ, doing an Indian-Afro spin on Bollywood music in her parent’s backyard. Can it get more chill than this? Just what you need to wind down or groove or start your mornings. Choose your pick.

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Whenever you're ready, here are 2 ways I can help you:

• If you're looking for support with your finances, you can start a (free) conversation with me to see how I can help. Here is my calendar for a FREE 30 minute consultation

• Not ready to commit? Email me your questions and I am happy to if I can get them answered in future editions of this newsletter.