Global View Investment Blog

2024 Election Jitters? How to Prepare Your Portfolio for Volatility

With the slate all but officially set, the 2024 elections will see a rematch of Presidents Donald Trump and Joe Biden. Given the volatility over the last several years, it’s natural for you to feel uncertain about the election and how the outcome might affect you and your wealth.

In our blog today, we’ll talk about three myths associated with Presidential election years and share some thoughts on preparing your portfolio for any volatility that may come with the election process (before, during, or after).

As a Greenville financial advisor, we’ve guided clients through the ebbs and flows of many election cycles, always focusing on comprehensive financial planning and tax-efficient strategies rather than getting caught up in the noise that an election year often brings. 


Myth 1: Elections Predict Market Performance

One of the most common misconceptions is that the outcome of an election can reliably predict stock market movements. However, historical data shows that market performance is influenced by many factors beyond who sits in the Oval Office. 

Politics and markets can be like oil and water; they don't mix as clearly as you'd think.

While elections can introduce short-term volatility due to uncertainty, the market's long-term trajectory is more closely tied to economic fundamentals, corporate earnings, and global events. 

Ultimately, investing based on election results is like predicting the weather by looking at yesterday. Sure, it gives you an idea, but it's not the whole picture. Staying informed, keeping your portfolio well-diversified, and focused on long-term goals is usually a safer bet than playing a political fortune teller.


Myth 2: The Markets Will Crash if [Insert Name] is Elected

The idea that the stock market will crash if a specific person wins the White House is a common myth often circulating during election seasons. It's rooted in the fear of change or uncertainty that a new administration might bring. However, history shows us that markets are incredibly resilient and influenced by many factors beyond just who sits in the Oval Office.

The stock market is a complex beast. It responds to various inputs like economic data, global events, and corporate earnings, not just political changes. While elections can introduce uncertainty, which markets typically don't love, they adapt quickly to new environments. 

As a fee-only financial advisor in Greenville, we emphasize the importance of a resilient strategy focusing on diversification and long-term goals regardless of the political climate.


Myth 3: Major Overhauls Happen Overnight

With every election, there's talk of sweeping changes, especially concerning tax laws and regulations that may impact you. While these concerns are valid, it's crucial to remember that significant overhauls typically require time to be debated, passed, and implemented. As a Greenville CFP®, we advise clients to stay informed and proactive, rather than reactive, to potential tax law changes. 


How to Prepare Your Portfolio for Volatility

1. Diversification remains a cornerstone of mitigating risk, especially during uncertain times like an election year. Ensuring your investments are spread across different asset classes can help cushion against market swings driven by election-related news.


2. Short-term market volatility can be unnerving, but it's important to remember your long-term financial goals. Avoid making impulsive decisions based on temporary fluctuations. Instead, focus on the bigger picture and your retirement plans.


3. Keeping abreast of developments is wise, but filtering the noise and focusing on information directly affecting your investment strategy is important. This is where the power of a partnership with a Greenville financial advisor, like Global View Investment Advisors, can provide clarity and guidance through market volatility.


4. With potential tax law changes, incorporating tax planning into your investment strategy is more important than ever. Strategies such as tax-loss harvesting or considering tax-advantaged accounts can play a pivotal role in optimizing your portfolio's tax efficiency.


5. Election years are an opportune time to review your financial plan with your advisor. This ensures that your investment strategy aligns with your long-term goals, risk tolerance, and the current economic environment. Your financial plan shouldn’t just sit in a nice binder on a shelf. It should be a living document that adjusts with the ebbs and flows of the market and economy and adjusts based on your life events. 


6. Re-evaluate your risk tolerance regularly. Times of uncertainty are a good reminder to ensure you're comfortable with your investment's potential ups and downs.


7. Creating a cash reserve in place means the odds of you having to sell investments in a downturn to cover expenses are greatly reduced. 


8. Avoid making knee-jerk reactions. Yes, market dips can be unnerving, but investing is a long-term game. Rash decisions can derail your financial goals. Stay calm and keep a level head. Markets have weathered many elections and will likely do so again.


9. Work with a Greenville investment advisor to find historically resilient investments in uncertain times, like blue-chip stocks or high-grade bonds.


10. If market movements have thrown your asset allocation off-balance, it might be time to rebalance your portfolio based on new circumstances, whether that be economic or personal circumstances.


About Global View Investment Advisors

At Global View, we take pride in being an independent, privately-held Greenville investment advisory firm fully committed to you. As your fiduciary, we promise to prioritize your interests first, without any exceptions.


Our approach is straightforward and transparent—we're compensated solely through fees directly from you, like your accountant or lawyer, ensuring our advice is unbiased and in your best interests.


We firmly stand against commissions and third-party compensations, maintaining our unwavering independence and alignment with your financial goals.


With the stakes higher than ever, you deserve a team with a wealth of experience and a deep understanding of the financial world. Our advisors bring over two decades of experience from major financial hubs across the globe, offering you a perspective that encompasses a wide range of opportunities. 

Our history of navigating through various market cycles and economic conditions equips us. Connect with us to learn more about our services for successful individuals and families.

Joe Hines

Written by Joe Hines

Joey's primary focus is working with clients in the goals setting and financial planning process. He has extensive experience is in helping clients facilitate the decision making process, leading them through the implementation of their financial plan and contributing to their peace of mind. This includes helping clients gain an understanding of estate planning, charitable giving, and helping them implement these plans by working closely with estate planning attorneys.

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