Campaign 2024: Sticking With Stocks Through Elections Pays Off

In my previous post, I pointed out how tinkering with your stock portfolio ahead of elections might cause you to miss out on future gains. It doesn’t matter who is in the White House or what the makeup of Congress looks like—the smartest strategy has always been to stick with stocks as part of a long-term plan. Yet, Wall Street pundits love to stir the pot, pushing for immediate action based on the latest poll or candidate comment.

With 2024 Election Day upon us, it's important to remember that political predictions often don’t translate into market realities. History shows that both Republican and Democratic presidencies have seen stocks rise or fall due to a multitude of factors beyond politics. Presidential terms like those of Herbert Hoover, Franklin D. Roosevelt, and George W. Bush stand out as rare instances where equities saw negative returns. But even here, the sitting president or party wasn’t the sole cause of those results.

In 1932, the U.S. was in the midst of the Great Depression. Roosevelt’s second term included World War II, while George W.’s first term included the terrorist attacks on September 11 and the second term included the Great Financial Crisis.

When emotions run high during election seasons, investors can become their own worst enemies, veering off course from their long-term goals. It’s essential to remember that campaign promises rarely become policy as quickly—or at all—as candidates claim. Over the years, The Prudent Speculator has endured 11 presidential elections...and the world and the stock market kept spinning the day after.

Note, too, that the last two presidential campaigns included the two combatants in this year’s race for the White House, yet stocks enjoyed terrific returns during both administrations.

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Volatility is the Friend of the Long-Term-Oriented Investor

I continue to believe that market gyrations can afford opportunity to the patience investor. Take Synchrony Financial (SYF), for example. The consumer financial services company reported strong Q3 earnings, with EPS of $1.94 beating estimates, and net revenue growth of 10%. Despite minor increases in delinquencies and net charge-offs, the company’s credit quality remained solid.

Synchrony’s partnerships with major brands like DICK’s Sporting Goods and Gibson continue to strengthen its market position. Management’s decision to raise the 2024 EPS outlook shows confidence in the future, and the stock, trading at less than 9 times forward earnings, looks like a winner for long-term-oriented investors.

Instead of letting political noise drive investment decisions, focus on the fundamentals of the companies owned. In the long run, it’s the consistent execution of a solid investment strategy that wins the race.

This report is an excerpt from a report written by The Prudent Speculator investment newsletter, of which I am Editor. For more in-depth analysis and exclusive insights like those shared in this article consider joining The Prudent Speculator here.