The Reality of Election Volatility

October 15, 2020

Estimated Reading Time: 4

The Reality of Election Volatility

As of today, we are officially 19 days away from the U.S. 2020 Presidential Election. Investors are waiting with bated breath to see how it plays out, and, more importantly, how it could affect their portfolios.

While it is easy to get caught up in the turbulence of the news cycle and warnings about “devastation” to the markets if one candidate wins over the other, the reality is much more mundane. We highlight three key points to keep in mind during the coming months:

  • The election outcome has, historically, not had a significant impact on market performance over the long-term
  • During election cycles, volatility increases, but only temporarily
  • The biggest danger lurks in emotional reactions to temporary uncertainty

The key word here is “temporary” - the presidential election cycle is only a couple of months’ worth of volatility. Maintaining a long-term investment focus frames the election volatility as a blip in the grand scheme of market performance, and helps an investor keep their eyes on their overarching financial goals.

The Election Outcome: More Bark Than Bite

While the presidential election is a prime opportunity for newscasters to speculate on the effects of one candidate’s presidency over the other, the winner of the election has had a minimal effect on the market’s performance over the long term. Historically, the party of Congress has had a more significant effect on market performance than the president.

While some volatility may show up ahead of the election, the majority of market volatility has happened in November and December after the elections. The market prioritizes stability, and once the new (or current) administration is settled (or re-settled), the market calms itself ahead of four coming years of leadership stability.

Temporary Volatility Increases: Just Like a Roller Coaster

The last time you were on a roller coaster, you probably remember the stomach-churning ups-and-downs throughout the ride and feeling dizzy as you stepped onto the exit platform. You just went through a lot.

The average time of a roller coaster in the U.S. is 112 seconds. All the swinging and flipping happens in less than two minutes - it’s only our perception of the event that makes it feel so long when we’re in the middle of it. It’s the same as the presidential election, only with lower stakes.

In the short-term, the presidential election drives volatility because it creates uncertainty in the market. When we’re in the middle of it, it seems crazy and overwhelming, but if we can keep our focus on the long-term, it can help us gain a rock-solid perspective that is necessary for success in long-term strategies.

Emotional Reactions: Please Do Not Press the Eject Button

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One of the most dangerous times for investors is during periods of heightened emotions. There’s a reason we stay out of discussing “Politics and Religion” in polite company - these two topics are possibly the most emotionally-driven because they lie so close to what we see as fundamental truths about the world. And with news stations getting better and better at causing emotional reactions in their viewers, this election may turn out to be the most emotionally-charged in U.S. history.

During periods of high emotions, some investors may “lose their nerve” and hit the sell button. As advisors, we recommend against this type of reactive decision-making because it may cause a permanent loss of capital in an investor’s portfolio.

For investors currently working with a wealth manager, their best strategy is to fall back on their well-positioned strategy likely focused on winning over the long-term. Being able to lean on a solid financial plan in times of heightened emotion and volatility is a rational investment strategy - one that can minimize the chances of an emotional investment decision.

2021 is right around the corner, and with it comes the much-needed stability that has helped build bull markets in the past. Until then, the best tool to keep in your pocket for both you and your portfolio is to keep in mind the old adage “this, too, will pass.”


Important Disclosure Information

Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Chicago Partners Investment Group LLC (“CP”), or any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from CP. Please remember to contact CP, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. CP is neither a law firm nor a certified public accounting firm and no portion of the commentary content should be construed as legal or accounting advice. A copy of the CP’s current written disclosure Brochure discussing our advisory services and fees continues to remain available upon request.

October 15, 2020

Estimated Reading Time: 4

The Reality of Election Volatility

As of today, we are officially 19 days away from the U.S. 2020 Presidential Election. Investors are waiting with bated breath to see how it plays out, and, more importantly, how it could affect their portfolios.

While it is easy to get caught up in the turbulence of the news cycle and warnings about “devastation” to the markets if one candidate wins over the other, the reality is much more mundane. We highlight three key points to keep in mind during the coming months:

  • The election outcome has, historically, not had a significant impact on market performance over the long-term
  • During election cycles, volatility increases, but only temporarily
  • The biggest danger lurks in emotional reactions to temporary uncertainty

The key word here is “temporary” - the presidential election cycle is only a couple of months’ worth of volatility. Maintaining a long-term investment focus frames the election volatility as a blip in the grand scheme of market performance, and helps an investor keep their eyes on their overarching financial goals.

The Election Outcome: More Bark Than Bite

While the presidential election is a prime opportunity for newscasters to speculate on the effects of one candidate’s presidency over the other, the winner of the election has had a minimal effect on the market’s performance over the long term. Historically, the party of Congress has had a more significant effect on market performance than the president.

While some volatility may show up ahead of the election, the majority of market volatility has happened in November and December after the elections. The market prioritizes stability, and once the new (or current) administration is settled (or re-settled), the market calms itself ahead of four coming years of leadership stability.

Temporary Volatility Increases: Just Like a Roller Coaster

The last time you were on a roller coaster, you probably remember the stomach-churning ups-and-downs throughout the ride and feeling dizzy as you stepped onto the exit platform. You just went through a lot.

The average time of a roller coaster in the U.S. is 112 seconds. All the swinging and flipping happens in less than two minutes - it’s only our perception of the event that makes it feel so long when we’re in the middle of it. It’s the same as the presidential election, only with lower stakes.

In the short-term, the presidential election drives volatility because it creates uncertainty in the market. When we’re in the middle of it, it seems crazy and overwhelming, but if we can keep our focus on the long-term, it can help us gain a rock-solid perspective that is necessary for success in long-term strategies.

Emotional Reactions: Please Do Not Press the Eject Button

One of the most dangerous times for investors is during periods of heightened emotions. There’s a reason we stay out of discussing “Politics and Religion” in polite company - these two topics are possibly the most emotionally-driven because they lie so close to what we see as fundamental truths about the world. And with news stations getting better and better at causing emotional reactions in their viewers, this election may turn out to be the most emotionally-charged in U.S. history.

During periods of high emotions, some investors may “lose their nerve” and hit the sell button. As advisors, we recommend against this type of reactive decision-making because it may cause a permanent loss of capital in an investor’s portfolio.

For investors currently working with a wealth manager, their best strategy is to fall back on their well-positioned strategy likely focused on winning over the long-term. Being able to lean on a solid financial plan in times of heightened emotion and volatility is a rational investment strategy - one that can minimize the chances of an emotional investment decision.

2021 is right around the corner, and with it comes the much-needed stability that has helped build bull markets in the past. Until then, the best tool to keep in your pocket for both you and your portfolio is to keep in mind the old adage “this, too, will pass.”


Important Disclosure Information

Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Chicago Partners Investment Group LLC (“CP”), or any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from CP. Please remember to contact CP, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. CP is neither a law firm nor a certified public accounting firm and no portion of the commentary content should be construed as legal or accounting advice. A copy of the CP’s current written disclosure Brochure discussing our advisory services and fees continues to remain available upon request.

The Reality of Election Volatility

October 15, 2020

Estimated Reading Time: 4

The Reality of Election Volatility

As of today, we are officially 19 days away from the U.S. 2020 Presidential Election. Investors are waiting with bated breath to see how it plays out, and, more importantly, how it could affect their portfolios.
While it is easy to get caught up in the turbulence of the news cycle and warnings about “devastation” to the markets if one candidate wins over the other, the reality is much more mundane. We highlight three key points to keep in mind during the coming months:

The election outcome has, historically, not had a significant impact on market performance over the long-term
During election cycles, volatility increases, but only temporarily
The biggest danger lurks in emotional reactions to temporary uncertainty

The key word here is “temporary” – the presidential election cycle is only a couple of months’ worth of volatility. Maintaining a long-term investment focus frames the election volatility as a blip in the grand scheme of market performance, and helps an investor keep their eyes on their overarching financial goals.

The Election Outcome: More Bark Than Bite

While the presidential election is a prime opportunity for newscasters to speculate on the effects of one candidate’s presidency over the other, the winner of the election has had a minimal effect on the market’s performance over the long term. Historically, the party of Congress has had a more significant effect on market performance than the president.
While some volatility may show up ahead of the election, the majority of market volatility has happened in November and December after the elections. The market prioritizes stability, and once the new (or current) administration is settled (or re-settled), the market calms itself ahead of four coming years of leadership stability.

Temporary Volatility Increases: Just Like a Roller Coaster

The last time you were on a roller coaster, you probably remember the stomach-churning ups-and-downs throughout the ride and feeling dizzy as you stepped onto the exit platform. You just went through a lot.
The average time of a roller coaster in the U.S. is 112 seconds. All the swinging and flipping happens in less than two minutes – it’s only our perception of the event that makes it feel so long when we’re in the middle of it. It’s the same as the presidential election, only with lower stakes.
In the short-term, the presidential election drives volatility because it creates uncertainty in the market. When we’re in the middle of it, it seems crazy and overwhelming, but if we can keep our focus on the long-term, it can help us gain a rock-solid perspective that is necessary for success in long-term strategies.

Emotional Reactions: Please Do Not Press the Eject Button

One of the most dangerous times for investors is during periods of heightened emotions. There’s a reason we stay out of discussing “Politics and Religion” in polite company – these two topics are possibly the most emotionally-driven because they lie so close to what we see as fundamental truths about the world. And with news stations getting better and better at causing emotional reactions in their viewers, this election may turn out to be the most emotionally-charged in U.S. history.
During periods of high emotions, some investors may “lose their nerve” and hit the sell button. As advisors, we recommend against this type of reactive decision-making because it may cause a permanent loss of capital in an investor’s portfolio.
For investors currently working with a wealth manager, their best strategy is to fall back on their well-positioned strategy likely focused on winning over the long-term. Being able to lean on a solid financial plan in times of heightened emotion and volatility is a rational investment strategy – one that can minimize the chances of an emotional investment decision.
2021 is right around the corner, and with it comes the much-needed stability that has helped build bull markets in the past. Until then, the best tool to keep in your pocket for both you and your portfolio is to keep in mind the old adage “this, too, will pass.”

Important Disclosure Information
Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Chicago Partners Investment Group LLC (“CP”), or any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from CP. Please remember to contact CP, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. CP is neither a law firm nor a certified public accounting firm and no portion of the commentary content should be construed as legal or accounting advice. A copy of the CP’s current written disclosure Brochure discussing our advisory services and fees continues to remain available upon request.

October 15, 2020

Estimated Reading Time: 4

The Reality of Election Volatility

As of today, we are officially 19 days away from the U.S. 2020 Presidential Election. Investors are waiting with bated breath to see how it plays out, and, more importantly, how it could affect their portfolios.
While it is easy to get caught up in the turbulence of the news cycle and warnings about “devastation” to the markets if one candidate wins over the other, the reality is much more mundane. We highlight three key points to keep in mind during the coming months:

The election outcome has, historically, not had a significant impact on market performance over the long-term
During election cycles, volatility increases, but only temporarily
The biggest danger lurks in emotional reactions to temporary uncertainty

The key word here is “temporary” – the presidential election cycle is only a couple of months’ worth of volatility. Maintaining a long-term investment focus frames the election volatility as a blip in the grand scheme of market performance, and helps an investor keep their eyes on their overarching financial goals.

The Election Outcome: More Bark Than Bite

While the presidential election is a prime opportunity for newscasters to speculate on the effects of one candidate’s presidency over the other, the winner of the election has had a minimal effect on the market’s performance over the long term. Historically, the party of Congress has had a more significant effect on market performance than the president.
While some volatility may show up ahead of the election, the majority of market volatility has happened in November and December after the elections. The market prioritizes stability, and once the new (or current) administration is settled (or re-settled), the market calms itself ahead of four coming years of leadership stability.

Temporary Volatility Increases: Just Like a Roller Coaster

The last time you were on a roller coaster, you probably remember the stomach-churning ups-and-downs throughout the ride and feeling dizzy as you stepped onto the exit platform. You just went through a lot.
The average time of a roller coaster in the U.S. is 112 seconds. All the swinging and flipping happens in less than two minutes – it’s only our perception of the event that makes it feel so long when we’re in the middle of it. It’s the same as the presidential election, only with lower stakes.
In the short-term, the presidential election drives volatility because it creates uncertainty in the market. When we’re in the middle of it, it seems crazy and overwhelming, but if we can keep our focus on the long-term, it can help us gain a rock-solid perspective that is necessary for success in long-term strategies.

Emotional Reactions: Please Do Not Press the Eject Button

One of the most dangerous times for investors is during periods of heightened emotions. There’s a reason we stay out of discussing “Politics and Religion” in polite company – these two topics are possibly the most emotionally-driven because they lie so close to what we see as fundamental truths about the world. And with news stations getting better and better at causing emotional reactions in their viewers, this election may turn out to be the most emotionally-charged in U.S. history.
During periods of high emotions, some investors may “lose their nerve” and hit the sell button. As advisors, we recommend against this type of reactive decision-making because it may cause a permanent loss of capital in an investor’s portfolio.
For investors currently working with a wealth manager, their best strategy is to fall back on their well-positioned strategy likely focused on winning over the long-term. Being able to lean on a solid financial plan in times of heightened emotion and volatility is a rational investment strategy – one that can minimize the chances of an emotional investment decision.
2021 is right around the corner, and with it comes the much-needed stability that has helped build bull markets in the past. Until then, the best tool to keep in your pocket for both you and your portfolio is to keep in mind the old adage “this, too, will pass.”

Important Disclosure Information
Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Chicago Partners Investment Group LLC (“CP”), or any non-investment related content, made reference to directly or indirectly in this commentary will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this commentary serves as the receipt of, or as a substitute for, personalized investment advice from CP. Please remember to contact CP, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. CP is neither a law firm nor a certified public accounting firm and no portion of the commentary content should be construed as legal or accounting advice. A copy of the CP’s current written disclosure Brochure discussing our advisory services and fees continues to remain available upon request.Image