Political Unrest and Market Trends: What Does History Tell Us?

Investing is an inherently optimistic activity, but it can be hard to feel optimistic amidst the unrest at home and abroad.

In our latest You And Your Money podcast, WHZ Senior Partner and Chief Investment Officer Laurence Hale uses a historical lens to help shed some light on today's market fluctuations.

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Transcript

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Welcome to You and Your Money. Today's episode features Laurence Hale, senior partner and chief investment officer at WHZ Strategic Wealth Advisors. So let's talk about the headlines now. It feels like every day, there's another story about unrest here. Here, at home, or conflict overseas, and for a lot of investors, that's unsettling. How should people think or react in this kind of environment? Well, headlines can be scary. Yeah. And if you think about it, if, if you were to jump on an elevator and before you, you got on the elevator, you saw two words, plunge and soar, next to the buttons. Would you push those buttons? Well you know, a lot of it has to do with, with how different news is, is presented. And, and it can be scary. But that reaction from people is, is completely understandable, Gary. And, and investing is inherently an optimistic exercise. You're betting that the economy and corporate earnings are gonna be better in the future than they are today. But when you're reading about different wars, political division, global uncertainty, it can be hard at times to stay optimistic. And, but when we look at history, what that shows us is markets have lived through all of the above before. Political unrest, even major wars, have not prevented long-term investment growth. So let's give us some examples from history that really drive that point home. Yeah. There, you know, a really powerful example, it's, it's been quite some time, but, but was World War II. In the years leading up to the US entering the war, markets really struggled. but since the, once the US entered the conflict, stocks actually rallied for several years in a row. Now, that's a long time ago, and some more recent events, but still historical. We look at this pattern of, of other shocking events and assassinations, such as the assassination of, of John F. Kennedy Dr. Martin Luther King Jr. civil unrest in the '60s, Rodney King riots in the, in 1992. All these cases the markets recovered and moved higher over time. All right. What about more recent history, like you know, we remember 9/11 and the pandemic, of course. What about that? Yeah, those are great examples as well. And you know, 2001, the markets were already dealing with the aftermath of the, the dot-com and tech bubble when 9/11 occurred. And that made the downturn worse in the short term. So even then, markets went on to rally strongly in the years that followed. And during the pandemic in 2020, we saw one of the sharpest market sell-offs in history, and yet the market finished the year up in double digits after recovering from that initial shock. All right. So the takeaway is that uncertainty doesn't necessarily mean investors should start to panic. There's always something to worry about. And, and that's, that's exactly right, Gary. The, the world has always been uncertain. The key difference between successful long-term investors and unsuccessful ones is, is really discipline. Historically, investors who have stayed the course during volatile and frightening periods have been rewarded over time. And the challenge is really managing emotions, and having a plan before volatility hits, not reacting to it in the heat of the moment. Again reassuring message, especially given the constant stream of headlines these days, but Lawrence, if someone listening feels uneasy about how all of this affects their own financial plan, what should they do? Well, you know, they should start by revisiting their own plan and making sure it still aligns with their goals, their time horizon, and their comfort with risk. I'd also like to add, one of the most valuable benefits of working with a financial advisor is that you don't have to manage all of this alone.Um, world events are constantly changing. Headlines are shifting, markets shift, asset classes move at different speeds. And what was balanced six months ago, may not be as balanced today based upon how things are adjusting. And a big part of our role as advisors is proactively managing portfolios, rebalancing when necessary, adjusting allocations thoughtfully, and making sure the investment strategy continues to support our clients' broader financial plan. That ongoing oversight helps keep emotions out of decision-making and ensures that short-term headline don't derail long-term goals. It's about staying disciplined, staying diversified, and keeping a plan on track, even when the world feels uncertain. Oh, yeah, that makes a lot of sense. Having someone watching the portfolio, adjusting as conditions change instead of reacting after the fact. And hey, that's kind of what you do, right? It absolutely is. You know, and it's not about predicting every headline, every market move. It's about having a process in place and a professional partner who's monitoring things proactively. So, clients can stay focused on their lives not on the day-to-day noise in the markets. sa. For more information regarding wealth management and customized financial planning with WHZ Strategic Wealth Advisors, please visit whz wealth.com whz strategic wealth Advisors offer securities and advisory services through Commonwealth Financial Network Member FINRA sipc, a registered investment advisor Fixed insurance products and services offered through CES Insurance Agency. They practice at 697 Pomfret Street Pomfret Center Center, CT 06259 and 392AMerrow Road, Toland, CT 06084. They can be reached at 860-928-2341. WHZ Strategic Wealth Advisors do not provide legal or tax advice. The tenured financial services team strives to support clients in achieving their financial life goals while providing absolute confidence and unwavering partnership for life.