Your chance to get on the next "60-Second Trade"

In the days and weeks ahead there may be uncertainty about the election results. Here’s why you should maintain a long-term focus when it comes to your investments.

Now is the Time for Investors to Stay Focused on the Long Term The contentious U.S. presidential election is over. Given the roughly even split among voters, it’s understandable that a great deal of readers are disappointed—and others elated—at the results. When it comes to investing, however, these emotions must be set aside. History makes it clear that the stock market has no political preference. My message to investors this week, and in future weeks/months as the transition of power takes place, is clear: stay focused on your objectives and remember what it takes to achieve them. And that is, an asset allocation that’s aligned with your long-term goals, income needs, risk tolerance, and one that’s driven by economic fundamentals and corporate earnings. Short-term political outcomes should be walled off from these considerations. This is not to say that the election result does not matter. It does, as the president influences and sometimes establishes economic policies. But these changes do not take place immediately—there is plenty of time to assess how campaign proposals take shape as actual policy, and/or whether many of the ideas floated on the campaign trail get watered down substantially or scrapped altogether. Remember, too, that economic cycles do not fit neatly into four-year boxes depending on what party is in power. History reminds us to keep our cool. Since the inception of a version of the S&P 500 in the 1920’s1 , there have been 24 U.S. presidential elections. In 20 of them, the S&P 500 Index registered positive total returns. In the four instances when the stock market fell, the U.S. economy was in the Great Depression, the early days of World War II, the 2000 tech bubble, and the 2008 Global Financial Crisis. Today, we have 4% unemployment, roughly 2.5% inflation, 2+% GDP growth, and solid corporate earnings growth (see below). This is the data that matters.1 A Guide to Strengthening Your Portfolio Through Election Cycles As we navigate the post-election landscape, now is the perfect opportunity to revisit and strengthen your portfolio. Designing a retirement portfolio that holds up in any market environment can be challenging. So today, I’m offering our guide, 7 Secrets to Building the Ultimate DIY Retirement Portfolio 2, which offer insights on: How to accurately establish your retirement income needs The two phases of determining your asset allocation Investing rules to help you avoid self-sabotage Plus, our views on key steps to create and maintain the ultimate retirement portfolio If you have $500,000+ to invest, get our free 7 Secrets to Building the Ultimate DIY Retirement Portfolio 2 guide today. Nevertheless, in the 30+ years I've been an investment manager, there has always been investor sentiment that if candidate ____ wins the election, it will be terrible for the stock market. But a look at past election year returns—as well as longer-term returns for U.S. stocks—demonstrates that such an outcome has never materialized. In the cases where we have seen post-election downturns, it has been tied to broader economic factors—not the election or re-election of a president. The chart below drives this point home. If a person invested money in the stock market only when their preferred political party was in the White House, it would have meant severely reducing total return over time. This is true of both Democrats and Republicans. Investing for the long-term—regardless of who was president—clearly delivered the best result. Growth of $10,000 (1948-2023) Source: Data from Morningstar, Charles Schwab 3 If investors are looking for somewhere to divert their attention in a noisy political climate, look no further than U.S. corporate earnings. The news cycle has essentially buried any mention of the stock market's most critical driver, in my view. There are plenty of reasons to be optimistic. Through November 1, we have seen Q3 results from 350 S&P 500 index members, or 70% of the index's total membership. Total earnings for these 350 companies are +8.8% higher than the same period last year on +5.7% higher revenues. 74.9% of these reporting companies beat their earnings per share (EPS) estimates and 60.6% beat revenue estimates. These are solid results. If we look at earnings and revenue growth rates for these 350 companies compared to previous periods, we find that both are solidly above average. Q3 Earnings Growth Rates Compared Q3 Revenue Growth Rates Compared In terms of ‘beats percentages,’ we also see earnings and revenue well within historical averages. Q3 EPS Beats % Compared Q3 Revenue Beats % Compared Finally, if we combined current results with Zack’s estimates for the 150 companies yet to report, we find that total earnings growth for the S&P 500 index could be +6.8% year-over-year on +5.4% higher revenues. Again, these are nicely positive results, and ones that investors should focus on more than the election. Bottom Line for Investors Over time, the stock market responds more to long-term earnings and economic growth trends, not to changes in political leadership. The emotional gravity of an election—and this election in particular—may make it appear as though the outcome will make or break the nation. But I believe this mindset puts far too much emphasis on political figures and policies, and far too little emphasis on the real engines of the U.S. economy – corporate earnings, small business growth, investment, the consumer, and innovation. Politicians come and go, but the desire to grow, innovate, and pursue profit remains a constant. Focusing on these enduring economic drivers rather than political shifts can help you take a more grounded approach to investing. To support this perspective, I’m offering our guide, 7 Secrets to Building the Ultimate DIY Retirement Portfolio.4 This guide offers essential tips and insights to help you create a portfolio that aligns with your retirement goals. It covers: How to accurately establish your retirement income needs The two phases of determining your asset allocation Investing rules to help you avoid self-sabotage Plus, our views on key steps to create and maintain the ultimate retirement portfolio If you have $500,000 or more to invest, get this guide to learn our ideas on the step-by-step process of building and maintaining a retirement portfolio that will potentially help you reach your goals and enjoy a secure retirement. About Zacks Investment Management Zacks Investment Management was born out of one of the country’s largest providers of independent research, Zacks Investment Research. Our independent research capabilities from our parent company truly distinguish us from other wealth management firms - our strategies are derived from research and innovation, including the proprietary Zacks Rank stock selection model, earnings surprise and estimate revision factors. At Zacks Investment Management, we work with clients with $500,000 or more to invest, and we use this independent research, 35+ years of investment management experience, and tools we’ve developed to design customized investment portfolios based on each client’s individual needs. The end result is investment management that is research driven, results oriented and client focused. Talk to a Zacks Wealth Advisor today. © Zacks Investment Management  |  Privacy Policy 1 The S&P 500 Index in its current form was created in 1957. However, as early as 1923, the Standard Statistics Company, which later became Standard & Poor’s in 1941, created its first stock market index, which tracked the stocks of 233 US companies on a weekly basis. Three years later, the company developed a 90-stock index that was calculated daily. 2 ZIM may amend or rescind the guide “7 Secrets to Building the Ultimate Retirement Portfolio” for any reason and at ZIM’s discretion. 3 Charles Schwab. 2023. 4 ZIM may amend or rescind the guide “7 Secrets to Building the Ultimate Retirement Portfolio” for any reason and at ZIM’s discretion. DISCLOSURE Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. Zacks Investment Management, Inc. is a wholly-owned subsidiary of Zacks Investment Research. Zacks Investment Management is an independent Registered Investment Advisory firm and acts as an investment manager for individuals and institutions. 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