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This november, don't choose

06 October 2020

This document is directed at investment professionals and qualified investors (as defined by MiFID/FCA regulations).

Many investors are now studying polls and trying to guess who will win the presidential election so they can position their portfolios strategically. But what does history say about investing based on politics?

  • Investors would not have been well served by choosing to invest alongside only certain political parties. Since 1968, which many people consider the beginning of the modern political party alignment, portfolios that were invested only during either Republican or Democratic presidencies have dramatically underperformed a buy and hold strategy.
  • Historically, the best performing portfolio is one that bought stocks and held them throughout Democratic and Republican administrations. An investment of $10,000 invested irrespective of which party controlled the Oval Office outperformed the “partisan” portfolios by over a million dollars.
  • We rarely look back on stock market returns and attribute them to political parties. Investors may potentially benefit from history’s lesson: get out and vote at the polling booths with your pens but don’t vote with your portfolios. 

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