“Over decades, it’s American innovation that succeeds, no matter what politicians do.” — David Booth, November 6, 2020
And I would argue British innovation too …
But the point I want to make is that with the U.S. presidential election called, and promising news of at least one vaccine announced, a U.S. market surge reminds us how keen investors are for a sense of closure.
That said, who knows how long the mood will last? Come what may between the U.S. presidential election that’s just ended and the inauguration yet to occur, the results will undoubtedly be attention-grabbing and action-packed. Social media and the popular press will see to that, as they feed on – and are fed by – our fascination over breaking news.
To counter all the excitement, I offer three calming insights:
(1) Cause and effect are rarely as direct as we might hope or fear.
(2) It’s much easier to explain an outcome than to predict it.
(3) Elections come and go. Your investments last a lifetime.
As Dimensional Fund Advisors has demonstrated in this excellent illustration reproduced above:
“for nearly 100 years of US presidential terms [the data] shows a consistent upward march for US equities regardless of the administration in place.”
In other words, politics aside, your best chance for achieving your personal financial goals remains the same: Continue to give your investments ample time and space to benefit from the market forces just described.
As we move forward together, we hope you continue living according to your values, but heed this valuable advice about your lifetime investments.
Stay the course!