The Next President’s Impact on Your Portfolio

There are many factors to consider when deciding which presidential candidate gets your vote. It’s wise to compare their professional and political experiences, ideology, domestic policy, views on defense and international issues, and so much more…. But please do not waste too much time reviewing their economic policies. Why? Because if history teaches us anything, the next president will have little to no effect on the economy, the markets, or your investment returns.

We want to believe that the president does in fact have some great control over the economy, but it’s just not true. While they do take the blame in times of recession, and happily take the credit when things are going well, they are rarely the cause of either. What does impact the economy is the business cycle. The business cycle has four main phases – expansion, peak, contraction, and trough- and when a president enters office is what largely determines just how lucky or unlucky they will be regarding the economy.

If there’s one person who does have a substantial impact on the U.S. economy, it’s the Chairman of the Federal Reserve Board, who controls our monetary policy. Monetary policy does impact the economy and we will save that discussion for a later time. The ability the president has for economic influence comes primarily via his or her fiscal policy, which is focused on government spending and taxation, but only if he or she can successfully influence Congress to agree.

If all the recent market volatility has you worried about your portfolio, focus on making sure your portfolio is properly allocated for the long-term, so you can better weather the down cycles. Don’t cast your vote based on the current state of the economy, but on other issues that matter most to you. And don’t worry…. Donald, Bernie, Ted, or Hillary likely won’t have much impact regarding what happens to your investments.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

Securities and advisory services offered through LPL Financial, a registered investment advisor, member FINRA/SIPC.