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Reflecting Back

Published by: Chris Kittrell Date: January 04, 2017

I thought 2017 might start off differently. I was wrong. When it comes to money and investments, the topic of politics led most discussions throughout 2016, and from the calls I’ve received in the first week of January it doesn’t look to let up any time soon. By now, we know that Americans turned out with great passion and vigor to vote for their candidate of choice. Half the country was excited and relieved with the outcome. The other half remains nervous or even angry. As President-elect Donald Trump’s inauguration date approaches my hope remains that as Americans, we can come together in order to help tackle the challenges of the future as a united country.

I don’t remember exactly when it started but for going on at least eighteen months, I’ve fielded questions on an almost daily basis about the election results and how they could affect investment portfolios and personal retirement plans. Two months later, it’s still a hot topic. What I’ve discovered as I’ve probed deeper past the “normal” worry that seems to exist around every election cycle is, that many times, it’s easier to worry about things we can’t control than the things in our life that we do have some control over. The worry that many of us feel is warranted, but not for reasons that you might imagine. So what to do?

While there are many things in life that we can’t control like election results, we can focus our energy towards having a financial plan that addresses what’s important to each of us. We can be aware of the difference between savings, speculation and investing. We can build portfolios to support our financial plans that are well diversified, especially given the last few years, when U.S. stocks have outperformed almost every major asset class. We can choose not to worry about short-term volatility. Markets tend to move in wild swings leading up to and immediately after any Presidential election, and then they return to setting prices based on the performance of the companies that make up the markets. We can choose to believe in the efficiency of markets, which then allow us to see that companies like Apple will still sell iGadgets and try to maximize their own profit in the process, no matter which candidate ends up in the Oval Office.

To this point, a $1 investment in the S&P 500 index in January 2000 would be worth $2.12 as of the end of December 2016. This performance was achieved in spite of the collapsing of the technology bubble, 9/11, the inflating and collapsing of the housing bubble, and the Great Financial Crisis. The markets also achieved this growth with Democrats, Republicans, good Presidents, and bad Presidents. During these challenging times companies adapted to the changing business and economic climate in order to maximize profits and sales for the benefit of their shareholders.

Reflecting back on 2016, I’m now more determined than ever to look at what has made this country great, instead of speculating on how politics might affect the stock market going forward. Don’t let the promises of the bulls, bears, donkeys, or elephants come between you and your financial goals. Focus on what you can control in your financial life, and allow the markets to reward you in the long run.

Chris Kittrell is co-founder of Rather & Kittrell. He is available at ckittrell@rkcapital.com