Phoenix Arizona Investment Adviser Teresa Bear Cautions Phoenix Investors to Look at How Major Historical Events Affect the Market Before Investing.
Last week I received my early ballot for the “Presidential Preference” Election here in Arizona. Currently, the red team has 4 candidates – Marco Rubio, Ted Cruz, John Kasich and Donald Trump. Team blue has two candidates – Bernie Sanders and Hillary Clinton.
If I were a betting woman, I would say that a month from now, the race will narrow to 4 candidates. At the end of July we’ll be down to two. We will finally pick a President on November 8th.
With all the media attention directed at the presidential campaign, many investors are concerned about investing in the stock market this year. Are those concerns warranted?
In the last month, I received two ballots in the mail. The second ballot was for the city of Tempe. This small election ballot brought me back to another small election several years ago.
It was early fall. The weather was starting to change as I drove to the polling place before heading for work. I turned on the radio. The DJ’s were saying something about a disaster in New York and the World Trade Center. I was confused. When I arrived at the polling place, there was a small TV set up showing the billowing smoke from the twin towers. I voted – although I don’t remember now what I was voting for.
America was in crisis. The entire country was immersed in a wave of shock, horror, fear and grief. It became a part of our national memory. Like the attack on Pearl Harbor and the assassination of JFK, we will always remember where we were and what we were doing when we found out about the 911 attacks.
America stopped. Flights were grounded. So was the stock market.
On Sept. 10, 2001, the Dow Jones Industrial Average (DJIA) closed at 9,605.51. In the aftermath of the September 11 terrorist attacks, the market reopened on Sept. 17, 2001, and hit an intraday low of 8,755.46.1
The short term effects were disastrous. However, within 2 months – just two months – the market had recovered to pre-disaster levels.
So what does that tell us? That the biggest disaster in the past generation was only a blip on the radar for investments.
Guess what – the same hold true for Presidential Elections. There have been many academic studies about how Presidential Elections affect the stock market and most of them suggest that the election of the most powerful person in the world has little to no impact on the US stock market.2
So what does have an impact on the stock market? There’s always “market noise” which can make you crazy watching day to day, but in the end, Americans determine the fate of American business.
Our economy is driven by the innovation of scientists in the lab and engineers at their computers. It grows as we educate children in classrooms throughout America. It is manifest in the grocery aisle when we choose Coke or Pepsi. It comes from the actions of the 300 million people who live in this country – not the person who inhabits the mansion at 1600 Pennsylvania Ave for a few years.
So should you invest in the market now? It depends on many things – your goals, your time horizon, your age, and your risk tolerance. Only YOU can decide if you’re ready to invest, but don’t let present day election hype keep you from looking towards YOUR financial future. If you’d like some help putting together a long-range financial strategy, please give me a call at 480-503-0050.