I chose the name Equanimity for my business because of what it means- mental calmness, composure, and evenness of temper, especially in a difficult situation. Now is the time when many people need that steadiness, after all, we’re in the middle of a contentious election. Many are suffering from election stress disorder. And though that might sound silly, it’s very real and it’s affecting a lot of people.
In an effort to bring calm where it is perhaps most needed, I want to take a moment to shed some light on a few important details regarding the market and the elections.
- Presidents do not have the capability to control the economy or the markets as much as we might like to think. So even though we are voting about our president, and therefore the leader of our country, we can know that this country was built with checks and balances. In most cases the president can’t make change on their own, they need either Congress or the Federal Reserve. The president is unable to make changes to interest rates, print money, make laws, pass spending bills, or change tax code.
- Historical differences between Democrat or Republic presidents and their respective stock market returns have been far less disparate than you might think. The actual difference is 0.2% per year since 1926 to 2019, with the Democratic presidents at the top.1
- The stock market grew the most during the Clinton administration, but what’s important to note is that the growth wasn’t necessarily attributable to him or his administration. What was more influential in terms of growth was what was going on at that time. The two main drivers of that market were the mass capitalization of the internet and the Baby Boomer generation reaching their highest earning potential. Similarly, the stock market was at it’s worst during Republican Herbert Hoover’s time in the White House, but that can mainly be attributed to the inadequate monetary response by the Federal Reserve and an insufficient and delayed fiscal stimulus by Congress.
- According to American Funds’ research, investment success has depended more on the strength and resilience of the American economy than on which candidate or party holds office. 3
You might think this is different, and yes, 2020 is different. In fact, some would say 2020 is different in every way! And yes, we are seeing a lot of issues right now, but it’s not the first time we’ve seen them. To help us see this clearly let’s review some history.
- Bankruptcies (businesses and municipalities)
- 1976 New York City threatens bankruptcy
- 2008 General Motors and Lehman Brothers declare bankruptcy among many other large and small companies
- 2013 Detroit claims bankruptcy.
- Consumer goods shortages
- 1942 to 1947 caused rationing of food, tires, tin, gas, and more.
- Civil unrest
- 1965 Civil rights marches
- 1992 Los Angeles Rodney King riots
- 2011 Occupy Wallstreet.
- High unemployment
- US unemployment between 15.9% and 24.9% between 1931 and 1940.2
- November 1982 US unemployment at 10.8%2
- US unemployment reaches as much as 10% 20093
The conclusion I hope you come to is that even though the election may be bringing you anxiety it may be unwarranted and unnecessary. Instead, turn this upside down. Take this time to remind yourself of all the great things that can be done. No matter the outcome of the election the sun will continue to rise and fall, our friends and families will still be there for hugs and good conversation and there will still be many reasons to get up in the morning. The most precious things in life will still remain, despite the final outcome. So take these next few days with grace and find the calm in what might seem as the impossible. And lastly, breathe, knowing this too shall pass.
1 Appleseed Shareholder Market Insights Letter. 2 November, 2020.
2Amadeo, Kimberly. Unemployment Rate by Year Since 1929 Compared to Inflation and GDP. The Balance.com. 17 September 2020.
3 American Funds. Review of US Presidential Elections. 30 September 2019.
Carrie Waters Schmidt is a registered representative of Lincoln Financial Advisors Corp., a broker/dealer (member SIPC) and registered investment advisor. Equanimity Wealth Planning and Investing is not an affiliate of Lincoln Financial Advisors. CRN-3315798-110420