October 2020

The day after the 2016 election an acquaintance sold about 30% of the stock mutual funds in his $750,000 retirement account and put it in cash. After the market jumped up over the next six months, he estimated he’d lost out on gains of about $35,000 due to his emotions ruling his decision making, he later told me. This year’s presidential election is heating up and many are worried how a contested election might affect the stock market. In fact, daily volatility – ups and downs – is rising in anticipation of the election, which isn’t unusual during pre-election months. As evidence, the S&P 500 was down 3.9% in September even as its 3rd quarter return was up 8.5%. 2020 year-to-date the index is up almost 4%. So, with things getting hotter by the day, what should investors do to prepare themselves – other than stay off Facebook and Twitter – to help avoid the mistake my acquaintance made four years ago?