How Will the 2020 Election Affect Your Portfolio?

A common question has emerged in recent review meetings: "Should I be worried about my portfolio during an election year?" The answer is complicated, but the short answer is... probably not... but you should expect some volatility. 

 One thing I've learned in my investment services career is that the market likes to know what's happening. Wall Street pundits speculate every day on major news outlets what "could" happen, and the result of uncertainty is typically a market tailspin. Yet the minute we know what's going to happen, like for example, who is going to win the election, the market stabilizes.

Instead of focusing on what "could be", let's focus on what we do know as it relates to elections and markets.

In 2016, many election predictors indicated the market would decline significantly if Donald Trump was elected. Instead, the months after Donald Trump was elected, the opposite occurred. That's not unique to President Trump, though. In my lifetime, there hasn't been a single instance the market significantly tumbled immediately after an election. The reality is that the year leading up to a presidential election, as well as a presidential term of 4-8 years, is just a blip of time for the average long-term investor. It may seem like a long time for us, but it's not for stocks.

At Iowa Wealth Management, our portfolios are comprised primarily of value stocks - blue chip companies that pay reasonable dividend income - and value stocks performed well against growth stocks in 2019. While growth stocks can be highly affected by political rumblings and rumors, value stocks are typically less exposed.

Rather than making major changes to your portfolio based on the news, I encourage you to use the time leading up to the election as an opportunity to discuss your portfolio with us and how it's currently diversified. At Iowa Wealth Management, we're here to help you, election year or otherwise, to make informed and prudent investment decisions.


 Past performance is no assurance of future results. Iowa Wealth Management is a registered investment adviser with its principal place of business in the State of Iowa. Opinions expressed are those of Iowa Wealth Management and are subject to change, not guaranteed and should not be considered recommendations to buy or sell any security.