“Fear not November’s challenge bold -
We’ve books and friends;
And hearths that can never grow cold:
These make amends!”
November’s Challenge
Americans once again exercised their civic responsibility last week, casting their votes to determine the occupant of our country’s highest office. For many, elections are fraught with worry and uncertainty, and it is easy to let these worries manifest as fear for the safety of our investments. Historically, however, markets tend not to increase in volatility due to elections or other singular political events. In fact, average volatility remains relatively constant, increasing slightly in the months preceding an election, and then actually slightly decreasing in the months following. Like a Vegas odds maker (though we prefer to believe that markets are, despite the analogy to gambling, a bit more manageable), markets are often surprisingly efficient at pricing in expected outcomes prior to an event itself, leading to a market reaction that seems sometimes shockingly mundane when contrasted with the volatility of our emotions or the enormity of the event itself.
As ever, our responsibility to our clients is to remain objective in our portfolio management. Knowing that election-driven market movement tends to be somewhat underwhelming, we made no adjustments to our model strategies leading up to the election, outside of the most recent quarterly rebalance at the beginning of October. We remain bullish in our outlook and allocation at this time. However, our mandate will now be to keep watch and gather information on the incoming administration’s potential economic and tax policies to determine, objectively, how to most thoughtfully and effectively manage your future portfolio allocations, and to continue to support you in making sound financial choices.
To put it simply, Vinoble’s by your side, and we’ll help you see it through. Don’t hesitate to reach out.