Every four years or so we find that reliable long-term investors become susceptible to a pernicious disease I like to call electionitis. This election cycle it seems to be getting an early start.
I believe electionitis is a contagious virus which cannot be treated with typical antibiotics. The major symptom of electionitis is that it causes otherwise rational investors to believe that cash is the only appropriate investment until the next election is over and “things settle down.”
The delusion that “things settle down” after an election is pure fantasy, of course, but someone with electionitis will focus so hard on the election date that they literally cannot envision even one day beyond it. To the electionitis victim it literally becomes a day of reckoning.
There is no doubt elections can be stressful to otherwise normally functioning humans. Some would say they are even purposefully designed to be stressful.
The politicians need to whip people into a frenzy to get their money and their vote. They need their ardent supporters to fund their campaign and show up at the polls. They need to find the right buttons to push to get casual voters to cast a ballot for them.
Since one of the easiest emotions to manipulate is fear, they will use it extensively to retain or obtain power. They will spend upwards of $6 billion (and even more words) this election cycle to infect you with electionitis.
But fear is not a sound investment strategy.
If you feel the manipulative politicians may have successfully infected you, a relative, or a friend with even the weakest form of electionitis, know that we have a treatment for the symptoms.
Our cure for electionitis is Segment I of our Portfolio SegmentationTM.
We 100% agree with the victims of electionitis that the world is a very unpredictable place over the next 12 months and that cash is an appropriate investment for any money that will be spent in the next 12 months. In fact, we go beyond 12 months. We believe the world is a very unpredictable place for the next 36 months regardless of any election cycle.
Thus, we generally invest any portion of our clients’ portfolios that will be used for cash flow in the next 3 years very conservatively — not in the stock market.
We believe investing in stocks is a long-term commitment – a commitment that spans at least two presidential elections (8+ years).
If you or someone you care about feels a bout of electionitis coming on, please call one of our advisors (262-446-8150) to schedule an appointment so our team can help.
Quote of the week: Cal Thomas: “One of the reasons people hate politics is that truth is rarely a politician’s objective. Election and power are.”
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Any opinions are those of IAG and not necessarily those of LPL Financial. Expressions of opinion are as of this date and are subject to change without notice. This information is not intended as a solicitation or an offer to buy or sell any security referred to herein. No strategy assures success or protects against loss. Investing involves risk including loss of principal.