24_Election Season Hangover

Election Season Hangover

Elections have the ability to stir up emotions like nothing else, and this election season, in the middle of a global pandemic, has taken it to another level. It’s been incredible. 

Although we now know that Joe Biden has won the presidency, the final make-up of the House and Senate is still unknown, especially in the Senate where the run-off for both seats in Georgia will determine if Republicans maintain a majority or if  Democrats control all three at the same time.  The results have significant impact on the likelihood of policy changes.  

Given all of this uncertainly, how should we react?  Well, at some point pretty soon, we’ll have winners declared and we can all go about our business and carry on with our lives. 

While competition creates tension, which gives the appearance of above average divisiveness, all elections are divisive just like all market crashes appear to be unique and much worse that any in history when we’re right in the middle of one. 

Most important, in my opinion, is that we all have the capacity to remain in control of our own lives, and we all have a choice of how we react, interpret and respond to events and election results.        

How We Interpret and Respond is Our Choice

The best example I ever heard of this was from a famous speaker and author who was to speak to an audience at 7:00 p.m. on the day of the space shuttle crash back in 1986.

He always made a point not to watch news on the day of a speaking engagement so that he could remain focused on delivering the best possible talk to his large audience. 

Five minutes before he walked on stage, someone asked him what he thought about the terrible space shuttle crash that took place earlier that morning.   Because he hadn’t watched the news that day, he was just hearing about it for the first time as he walked on stage.

Tremendously moved by it all, he began his talk by asking the audience what they thought made him feel so terrible at that moment.  And, of course, they all mentioned the space shuttle disaster. 

He disagreed and proceeded to point out a very important distinction.  If the crash was going to make him feel bad, it would have made him feel bad ten hours ago when it occurred. 

What made him feel terrible right now was not the event.  It was his interpretation of the event.  And, that was his choice. For contrast, as incredible as it may seem, there were some in other parts of the world who cheered this as payback for American greed. 

We all have a choice when it comes to how we interpret, and thus feel and respond to events like elections. 

I just did some quick math: a Democrat has been in the White House during 42% of my life, and a Republican for 58%.  I have achieved a wide range of positive and negative results during my entire life.  Because I’ve chosen to take full responsibility for every outcome I’ve experienced, I can state unequivocally that none of them was attributable to who was in the White House at the time, or who my Senator, Congressperson, or Governor was. 

2020 has certainly been a test on all fronts.  Take a moment to pause, reflect, and consciously choose your interpretation of it all.  And, then respond by confidently living the life you’ve earned!  I promise you that it’s all still there for you no matter who holds elected office.

Political Bias

While political debate is healthy from a democratic process perspective, it can be very dangerous if you allow politics to influence your investment decisions.  

I can’t possibly stress how important this is.  I’ve witnessed countless examples of pent up emotions clouding investment judgment over the last 30+ years.

And, it has happened on both sides of the aisle.  The political preferences of our Relaxing Retirement members span the entire spectrum and I’ve heard every potential doomsday scenario vividly predicted to me over the last few months if “X” gets elected vs. “Y.” 

The biggest blunder occurs when the political season is in high gear, our emotions run high, and we make predictions about the trajectory of stock market performance based on which candidates have won, and/or which party has control of the House and Senate when the final votes are tallied.   

Although we subjectively want to believe otherwise, if you go back and study stock market returns during various presidencies and various mixtures in congress, you can’t find one common thread among them except that their results are mixed.

Given this, election results can’t be part of your long-term investment policy decisions.  Please resist all temptation to alter your carefully thought out strategy due to your political bias.

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