‘Take the emotion out of investing’ during a presidential election year, strategist says. What to do instead

Finance

Video of former President Donald Trump and President Joe Biden is played during a hearing by the Select Committee to investigate the Jan. 6 attack on the U.S. Capitol, in Washington, D.C., on June 13, 2022.
Chip Somodevilla | Getty Images News | Getty Images

WEST PALM BEACH, Fla. — Investors’ emotions may run high in 2024, especially in the realm of politics as President Joe Biden and former President Donald Trump are poised for a rematch in this year’s election.

“Politics have become increasingly more emotional,” Moira McLachlan, senior investment strategist with AllianceBernstein’s wealth strategies group, said Wednesday at Financial Advisor Magazine’s Invest in Women conference in West Palm Beach, Florida.

However, investors should avoid knee-jerk reactions by setting and sticking to an investment plan, strategists said.

“It’s so important to stay invested, and you have to try to take the emotion out of investing” to keep from doing something “detrimental” to your goals, said Kristina Hooper, chief global market strategist at Invesco.

More from Women and Wealth:

Here’s a look at more coverage in CNBC’s Women & Wealth special report, where we explore ways women can increase income, save and make the most of opportunities.

Trying to time the stock market and predict its movements are largely a loser’s game. For example, over the past 30 years, the S&P 500 stock index had an 8% average annual return, according to a recent Wells Fargo Investment Institute analysis. Missing the 30 best days would have reduced average gains to 1.83%, for example, it found.

There are “a lot of geopolitical issues, a lot of things, that can spook us,” Hooper said.

Over the past four years, the world has witnessed a global pandemic and two wars, for example, said Jenny Johnson, president and CEO of Franklin Templeton.

It has taught investors they can’t predict what’s going to happen, she said.  

“So, diversify that portfolio,” Johnson added.

Whichever party wins the presidential contest, Republican or Democrat, history shows that the winner has hardly had a bearing on stock market returns, said McLachlan.

“We tend to think politics drives everything, but that’s certainly not the case,” she said.

Articles You May Like

Hugo Boss shares plunge 9% as firm cuts 2024 guidance amid slumping China demand
These are America’s 10 best states for buying and selling a home in 2024, with a big caveat at No. 1
The end of this tax break could be ‘very disruptive’ to business owners, expert says — what to know
Lower capital gains tax, cuts to food benefits: What Project 2025 could mean for your wallet in a Trump presidency
Activist Starboard took a stake in Match. Here are steps the investor may take to help lift shares