Turn off the Noise – Why Partisan Panic Shouldn’t Impact Your Investment Strategy

By Brian J. Cunningham, CFP®

The political rhetoric has never been louder or more invasive as we move closer to Election Day. Every talking head, political pundit, and Facebook friend seems to have a vision of the coming economic apocalypse if their candidate loses. During my 25 years as a private wealth advisor, I've guided hundreds of clients during seven presidential elections. Whenever someone asks me if they should reposition their portfolio to manage financial fallout from the election, my response is an emphatic, "No!”

Financial strategies should not be developed based on who is or may be running the government. Political perceptions create assumptions impacted by emotions, beliefs, personal experience, and many other intangibles that are difficult to measure accurately. Sound investment plans focus on market history, trends, and forecasts based on reliable statistical analyses. We strive for a healthy mix of investments in a well-balanced portfolio to produce the desired growth potential.

I build long-term relationships by understanding our clients' financial objectives, the changes they will face in the stages of their lives, and their risk tolerance. These variables don't change as a result of administration shifts. Our clients' investment strategies can evolve to benefit from the opportunities that arise, but they are not impacted by which party is in office. We consider the strong performance and potential for growth among various sectors, with several consistent standouts.

Green Energy Growth
In 2019, the renewable energy sector grew significantly over the previous year. Time and advancements in technology continue to bring down the costs of renewable energy, along with rising capacity factors and competition over battery storage. Increased innovation and collaboration between multiple stakeholders, and the inevitable replacement of retiring capacity within electricity markets, have created a new growth phase in renewable energy.

Gee, What's Up with 5G?
There's been much hype about how 5G technology will impact our lives. Unlike many highly touted advancements, this one is as impressive as advertised. 5G is superior to 4G in three key areas. The vast bandwidth will allow easy transfer of any weight of data. Its "low latency" defines 5G's ability to respond quickly when asked to transfer data back and forth. The high-density aspect of 5G means it can connect all the devices and uses related to homes, cars, wearables, industry, and new experiences still in development, like augmented reality. As CNET editor Brian Cooley puts it, "Forget about archaic examples like 'downloading a full-length movie in seconds,' and move your expectations to a world that's more responsive, transparent, and anticipatory."

Virtual Meeting Magic
The pandemic introduced many to the convenience of virtual video communication. From national conferences to family reunions, church services, to weekly business meetings, it seems like everyone has logged on to Zoom, GoToMeeting, Skype, Join.me, Google Hangouts, or one of the many other virtual meeting platforms during the past six months. While social distancing created the need to work remotely, the many benefits like improved productivity, increased employee satisfaction, flexibility, and retention, and cost savings ensure this will continue. Competition among existing platforms and the drive to enhance the experience present a significant investment opportunity.

The Beauty of Biotech
The pandemic has thrown a spotlight on the biotechnology sector as companies scramble to find the vaccine and treatments for COVID-19. As our clients have discovered, the life sciences have been a consistent growth area for many years because medical challenges never disappear. We have a flu vaccine, but we still get the flu. We have made great strides with gene therapy, but we haven't cured cancer. As the population ages, our demand for drugs rises.

The Gold (and Silver) Rush
Gold futures are at near-record highs, and up about 28% for the year in late August. Silver has more than doubled since hitting a multi-year low in March. The COVID-19-driven economic slump and the stimulus response have contributed to this sharp rise. Gold's role in an investment portfolio depends on how you view it. These perceptions range from preserving wealth to serving as a hedge against a declining dollar and rising inflation. For some, it is a safe haven, and for many of our clients, it is a diversifying investment. Gold stocks are appealing to growth investors as they rise and fall with the price of gold. I advise my clients to consider their risk tolerance as precious metal investing involves greater fluctuation and potential for losses.

Vote for Your Financial Advisor
If you are worried about how changing political forces may affect your investment strategy, find a Certified Financial Planner™ and fiduciary that you can trust to relieve your stress, and provide sound financial advice. You can't create a financial plan from a textbook, and you can't base your investment strategy on the nightly news. Ignore the elephants and donkeys!

I am always happy to meet with potential new clients. Call me at (843) 213-1819, and we'll schedule a time to talk.


The opinions shared in this blog are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.