Finance Roundtable Podcast
It is a complicated and tricky world out there. Without a solid understanding of how money works, life can be even more challenging.
We get it, talking about money is uncomfortable but we all can agree that it is an important topic to understand.
The Finance Roundtable Podcast team wants to bring you along as we interview some remarkable professors, professional athletes & financial strategists about money.
If you have ever wondered what is talked about between financial professionals and what goes through our minds when we are off the clock; then you will want to check out the Finance Roundtable Podcast.
Jacob Gold and Michael Cochell are Financial Advisors offering securities and advisory services through Cetera Advisor Networks LLC (doing insurance business in California as CFGAN Insurance Agency LLC), member FINRA/SIPC, a broker dealer and Registered Investment Adviser. Cetera is under separate ownership from any other named entity. Jacob’s California insurance license # 0E55425 Michael’s CA Insurance License # 0K90130. The views depicted in this material are for information purpose only and are not necessarily those of Cetera Advisor Networks. They should not be considered specific advice or recommendations for any individual. Neither Cetera Advisor Networks nor any of its representative may give legal or tax advice. Kelvin Gold is a Marketing Associate. Registered Address is 14850 North Scottsdale Road #255, Scottsdale, Arizona 85254.
Finance Roundtable Podcast
Navigating Election Season: Staying Focused on Long-Term Investment Strategies
Can political tensions really sway your investment decisions, or should the noise be tuned out? Join us on Finance Roundtable as we dissect this intriguing topic during the high-stakes election season with hosts Professor Jacob Gold, Michael Cochell, and Kelvin Gold. Promising insight beyond the usual media clamor, we explore how historical market data suggests a pattern of growth transcending political party changes. Our episode provides you with the tools to maintain your investment focus, emphasizing the consistent advantage of long-term strategies over reactive maneuvers.
Navigating the turbulent waters of election cycles, we stress the pivotal role of financial advisors in aligning your portfolio with your unique goals and risk tolerance. We discuss why knee-jerk reactions to political outcomes may do more harm than good and how even slight portfolio adjustments can bolster your confidence. With fascinating statistics—such as the rarity of negative market returns in election years—we offer a rational perspective amidst the chaos. Tune in for wise counsel on steering your financial ship through the storm of political distractions, ensuring you remain on course for your long-term objectives.
You are listening to Finance Roundtable, a podcast focused on demystifying money. The hosts, professor Jacob Gold, michael Koschel and Kelvin Gold, will educate and entertain you in all areas related to money. Sit back, relax and enjoy the show.
Speaker 2:Hello everybody, welcome to a new episode of the Finance Roundtable podcast. I'm Professor Jacob Gold, I'm Michael Cushell and I'm Kelvin Gold. Today's episode we're going to talk about keeping politics out of your portfolio. As we know, we're approaching a presidential election and I would say tensions are somewhat high out there these days, and today we're going to talk about how politics can create strong emotions and biases, but investors would be wise to tune out a lot of the noise and to focus long term when it comes to investing.
Speaker 2:Do elections really matter? Well, an example of this is that if someone were to have taken $1,000 and invested it in the S&P 500 when FDR became president back in 1933, today they would have over $21 million in the S&P 500. And, of course, during that time period we had seven Republican and eight Democratic presidents. So history does show that the markets, long-term, can appreciate whether there is a Democrat in the White House or a Republican. What's interesting, though, is, during the presidential election year, net asset flows in money market accounts tend to increase by twice as much as the year after an election. Many individuals begin to get fearful of what could be around the corner if a candidate gets elected or doesn't get elected. But staying on the sidelines can be risky, because what we've learned over the years is it's not so much about timing the market as it is having time in the markets. Any thoughts on that, mike? A little bit.
Speaker 3:Yeah, you know, as you mentioned earlier on, during the election years there's so much noise out there and for investors it becomes confusing on what to pay attention to and more often you find you tend to move away from the purpose of their goal or investing goals for the future because we get so caught up into that noise. So something that you alluded to was trying to stay focused on that purpose. I do find it much more difficult for those to do it during an election year, just because the amount of social media you're getting your car listened to the radio, it's nonstop news, data, information. But I think if you could hold on to your primary purpose, your own goals, and then let some of that news in a little bit of it, and if you can and you have a professional that you work with, it's always good to get an objective opinion to be able to stay on track.
Speaker 2:That's a really good point Because I think that instead of just pulling your money out of the markets, try to take a step back and say is this in my best interest? And maybe you don't know if it is in your best interest, given all of the moving parts, and that's a great time to reach out to your financial advisor, have that financial advisor, who hopefully understands your situation, to walk you through the possible outcomes of that decision. And most likely I know you and I have been in this position if someone calls us and they're nervous for one reason or the other, that's a good opportunity for us to hit the pause button and perhaps do some deep diving of figuring out are they allocated appropriately, based on their time horizon and risk tolerance? So if someone is nervous and they're thinking about getting out of the markets, maybe before pulling that trigger you just reevaluate how you're allocated and maybe just a few tweaks here or there can give you enough confidence to look more long term.
Speaker 2:Too many times people get afraid of their own shadow and they tend to stay on the sidelines and then economic activity still continues to move on without them. An interesting statistic over the last 20 election years there have only been two years, 2000 and 2008, where in that calendar year we had negative returns in the overall markets year we had negative returns in the overall markets and in 2020 and in 2008, I'm sorry, the year 2000 and 2008,. Both of those years it was more driven by economic issues rather than political issues. But so history does show that historically, those election years, whether a Republican is elected or a Democrat is elected, more times than not, we have seen historically that the markets are up in that overall calendar year.
Speaker 2:I'm going to share with you all a slide. This comes from an investment firm by the name of First Trust. First Trust has a slide in one of their informationals that really shows how the markets have done under a Democratic president versus a Republican president, and what you'll see on this slide here is something that's very important. Whether it's a Democratic president or Republican president, the markets tend to do very well when there is split power within Congress, when one political party does not have control of the White House, the House and the Senate and Kelly. Why would you think that that would be a scenario where, when we would have a split government, that economically things could, at least historically, be better than otherwise?
Speaker 4:Diversification.
Speaker 2:Yeah right, different perspectives, right. So if you have one political party that has the majority in the House, the Senate and the White House, many people might get very nervous that there's going to be new legislation that could change the business cycle, could change the dominance of a certain sector, whereas if there's checks and balances there, we recognize that it would have to be bipartisan to have something get passed, and knowing that bipartisan the thought of bipartisan approach is not exactly something that is utilized quite much these days we recognize that if we do have a balance of power, there perhaps will not be as many legislative bills, so then businesses can continue to focus on their business, their productivity, their bottom line, their bottom line. Instead, if they see that one political party is going to have vast amounts of power, they might be concerned that their overall market share might be threatened, and so, therefore, maybe they pull back on some expenditures and maybe they increase how much they spend on lobbyists to protect their interests, and so we can see in this chart that having a split Congress is actually a good thing. We don't know just yet how November 5th is going to play out, but the whole purpose of this episode today is recognizing that, instead of getting so caught up in the noise and making these assumptions that, if this happens, this other thing will then happen Really, what we should do is take a step back, look long-term and, if nothing else, reevaluate our time horizon, our risk tolerance, and make tweaks on that level, instead of making a drastic move and pulling money out of the market or being overly confident and going all in aggressively because of one candidate getting elected over another.
Speaker 2:That's really the main takeaway of this episode is to recognize that there are too many forces out there for us to control. But what we can control are our emotions, and we can control our own individual financial plan. So if you find yourself feeling uneasy leading up to this presidential election or for any other reason, that is the time to reach out to your financial advisor and ask him or her if they have some time to just walk you through your scenario, just to make sure that you are focused on the most important things long term, mike, anything to add to that? You?
Speaker 3:know. I'll add one point you mentioned briefly about history and what it's shown during election years, and we tend to forget about that during the actual election year. There's so much noise, so much attention going on, but perhaps that would help investors to rethink all that they're hearing. But when you look at history, as you mentioned the last 20 years during the election years, what has transpired? Maybe minimizing the amount of emotions and decision making and having some patience to move forward with that might make it easier.
Speaker 3:The other thought, too is there's so much attention during that election year, but keep in mind that perhaps the following 12, 18, or 24 months thereafter you have a little bit more insight of what kind of policies could come into play which actually most likely could shift the markets one way or the other, rather than just during that election year. So that's something to be mindful of. I know that's something that we'd like to pay attention to, not just 2024 and what's going to happen today, because most people are investing for a longer term and the policies can make a difference on what changes could occur, although we don't know what they will be as of yet. So just something to kind of allow investors to think more of a longer-term perspective, limiting rash or quick emotional decisions and having more of a thought-out plan, I think, is a good way to think about it when you look at history. Maybe that helps to ease the emotional strain that some of us may have.
Speaker 2:Really good point, mike, that's really good.
Speaker 2:And we talk a lot about long-term, long-term investing and for some people they might think that they're going to be long-term investors until they retire. But in reality you've got to have your money be working for you for as long as you're living and hopefully beyond. And so if someone's planning to retire in 10 years, in their mind they might think, oh, I've got to be very conservative by the time I retire, when hopefully they're going to have 20 plus years in retirement and so that time horizon is more like 30 plus years. So we have to keep that in mind that your money always has to be working for you, and it's time in the market, not so much trying to time the market. Kelly, any last words on your end?
Speaker 4:This year is actually the first year that I'm able to vote, because last year in 2020, I missed it by maybe five months. So there's a certain excitement about this election because I feel like I actually get to participate for once. Excitement about this election because I feel like I actually get to participate for once. But, yeah, I feel like the noise is a little bit more, maybe because I'm more aware of it now that I'm going to be able to vote, but it's pretty interesting to see it unravel and, yeah, we'll really know where we're going on November 5th.
Speaker 2:Yeah, so absolutely, we'll see. We'll see, and what we encourage people to just do is no matter how they vote, that doesn't matter. It's to actually vote, so to get out and vote. So hopefully you found this episode to be entertaining as well as knowledgeable. We thank you for joining us this time and stay tuned for future episodes in the future. Thank you everybody, thank you.
Speaker 1:Thank you for listening to Finance Roundtable. Make sure to check out our episodes at wwwfinanceroundtablepodcastcom. We also encourage you to explore wwwjacobgoldcom to find articles, research videos and more from Jacob Gold and Associates Inc. If you have a question for the show, please email Jacob at jacob at jacobgoldcom.
Speaker 2:Jacob Gold and Michael Koschel are financial advisors offering securities and advisory services through Cetera Advisor Networks LLC. Doing insurance business in California as CFGAN Insurance Agency LLC, member, finra SIPC, a broker dealer and registered investment advisor. Cetera is under separate ownership from any other named entity. Jacobs California Insurance License 0E55425. Insurance License 0E55425,. Michaels California Insurance License 0K90130. The views depicted in this material are for information purpose only and are not necessarily those of Cetera Advisor Network. They should not be considered specific advice or recommendations for any. Thank you.
