The Political Sell: Bad Choice or Horrible Choice?

Today, as I was watching CNBC and other news outlets, the coverage was primarily centered around a tweet that President Trump made earlier in the day. No one really knew what the tweet meant, but the fact that everyone was trying to figure it out was interesting to me.
Back on May 17, the market fell 1.8% on the news that there could possibly be an impeachment. President Trump and his dealings with Russia would come back to bite him, and take him out of office. The news outlets, again, were going crazy with the news.
All this recent fascination with President Trump had me thinking: What if someone sold their stocks every time the President did something stupid? How would that strategy work out?
Below is a chart of the S&P 500 along with some stupid things that Presidents have done in recent memory.
As you look at it, ask yourself the following question: “Would I have been better off selling my stock when this event occurred or holding onto it?”

Judging from the table above, this would certainly have been a losing strategy—possibly as dumb as the political misstep that made you want to sell to begin with.
I am fortunate to talk with dozens of people every day about their finances, and one of the recurring worries I hear is that there will be a market collapse because of a president. To all those worrying, my advice is this: Relax. The efficiency-tending and self-correcting nature of our capitalistic system is that this country will outlast any imperfect political action.
In fact, the nature of our capitalist system will make it so that economic conditions will consistently prove over the long-run (just look at the table above if you have any doubts). With over 25 years of investment management experience, and after coaching thousands of investors, the best strategy my partner and I have seen is staying true to your investing process and your investment goals.
It is true that there will be temporary pullbacks in the market following dumb political decisions—of course. However, our goal for our clients—and all people in general—is that they not follow these poor political moves with even poorer financial moves. One of the greatest parts of my job, as a personal investor and advisor, is capitalizing on poor political moves and helping others benefit from the market’s ability to self-correct.
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