Cypress Wealth Services
August 2020
This has been a crazy year so far, and with a presidential election coming up, it doesn’t seem likely that things will calm down anytime soon. On the contrary, with the country so politically divided, it seems that things will only get more and more intense over the next three months. As you hear the news and political commentary heat up, it can be easy to allow the emotion of the election to cause you to make costly investment mistakes. These are some of the biggest mistakes to watch out for.
Things are pretty crazy right now, so it is understandable if you’ve been feeling the urge to just sit this one out. It’s natural to want to move your investments out of the stock market and take a “wait and see” approach. However, sitting on the sidelines during turbulent times can be detrimental to an investment portfolio.
Some of the stock market’s greatest gains are made in single days. If you miss even a few of those days, it can have a major impact on your portfolio’s performance. This graph from Fidelity shows the impact of missing even just the five best days for the S&P 500 since 1980:
(*1)
Rather than sitting this one out, you should approach your investments with a long-term perspective. This year may look a little bit scary up close, but when you look back 20 years from now, how big of a difference will it make in the grand scheme of things?
Thinking The President Matters
Yes, the president matters—but not much, as far as the stock market is concerned. History has shown us that the stock market likes to go up, regardless of which party is in power, as you can see in this graph from Capital Group:
(*2)
So, you should not base your investing decisions on who you think will win the election or even who actually wins the election. Investing decisions should be based on thorough analysis and proven principles.
We are living in unprecedented times. While this election is unique in many ways, thanks to COVID-19, every other area of our lives is also currently unique. Just because you haven’t lived through this before doesn’t mean your financial plan cannot withstand it. No one could have predicted all that has happened in 2020, but your financial plan was designed to face the unknown.
One of the biggest mistakes you can make right now is throwing your carefully crafted plan out the window. It may feel like you need something new and different to match the times, but the world has seen strange times before, and sound investing principles were able to weather them.
How are you doing right now? Have you been able to tune out the election news and stick with your investment plan? Are you wishing you even had an investment plan right now? This might be the ideal time to lean on an experienced financial advisor for help with your investments.
If you could use some reassurance that you’re on the right path or even some guidance to figure out what is the right investment path for you to take, our team at Cypress Wealth Services can help. Call us at 866.888.6563 or contact one of our offices today for a complimentary consultation. You have enough things to worry about right now; your investments should not be one of them.
Cypress Wealth Services is an independent RIA firm providing financial planning and investment management to high net worth individuals, families, business owners, and institutions. Cypress Wealth Services comprises professionals with diverse backgrounds and extensive experience and qualifications. Cypress Wealth Services is uniquely qualified to serve a broad range of client needs, and their experience and expertise act as a foundation for their client service process. The firm uses The Second Growth, which focuses on efficiently protecting, growing, and transferring to their loved ones the wealth and legacy a person has already built. With offices in Palm Desert, CA, Tustin, CA, and Anchorage, AK, the firm serves clients across the country in Wealth Management Services, Fiduciary Services, 401(k) Design and Management, Investment Reporting Services, Financial and Retirement Planning, and more. For more information, visit www.CypressWS.com or call 760.834.7250.
(*1) - https://www.fidelity.com/bin-public/060_www_fidelity_com/documents/dont-miss-best-days.pdf
(*2) - https://www.capitalgroup.com/advisor/insights/articles/3-investor-mistakes-election-year.html
