The U.S. presidential election is barreling towards us. Many are eager and nervous to find out who will be the next commander-in-chief in a race between former President Donald Trump and Vice President Kamala Harris.
Even more are biting their nails with worry or anticipation for what could happen to the domestic and global markets around the world.
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GOBankingRates reached out to a few financial experts to see what the average investor should consider doing ahead of the results. Here are four money moves to make the week before the election, according to experts.
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“If you’re looking to protect yourself and maybe even make some money before the election, here’s what I’d tell you. First, raise some cash,” said financial expert David Materazzi, CEO of Galileo FX, an automated trading platform.
“If you’ve got stocks that have run up, take some profits. Cash gives you flexibility. If the market dips after the election, you’ll be ready to jump on some bargains,” he advised.
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“Think about companies that sell things people need no matter what: Groceries, electricity, healthcare,” Materazzi said. “These stocks might not make you rich overnight, but they’ll hold up if the market gets… shaky.”
Materazzi also suggested investors stick with dividend-paying stocks.
“When the market’s uncertain dividends provide a steady cash flow,” he said. “You get paid even if the stock price bounces around. Look for companies with a strong history of paying dividends.”
Investors should establish what is called an investment policy statement (IPS) and follow it, according to Robert R. Johnson, PhD, CFA, CAIA, and professor of finance at Heider College of Business at Creighton University.
“All investors should avail themselves of the services of a credentialed financial advisor who operates as a fiduciary,” said Johnson, noting how investing without a plan is like driving without a roadmap or GPS.
“Investors should not concern themselves with broad market moves or the crisis du jour,” he explained. “An IPS is a written document that clearly sets out a client’s return objectives and risk tolerance over that client’s relevant time horizon, along with applicable constraints such as liquidity needs and tax circumstances. In essence, an IPS sets out the ground rules of the investment process — it is the document that guides the investment plan.
The expert concluded, “Investors should take a long term approach and stay the course. Take a page from the late Jack Bogle, Vanguard founder, who said, ‘The wise investor knows that market timing is futile, and the only way to achieve consistent results is through a disciplined and patient approach.’”
“Think long-term: the election is just one event,” offered Materazzi. “Great companies keep growing no matter who is in office. If the market drops, that’s a chance to buy good stocks at a discount. That’s how you make real money.”
Robert Persichitte, an affiliate professor at Metropolitan State University of Denver, shared this story from 2016.
“U.S. dollar futures went down any time Trump started moving ahead in the polls. The market signaled that a Trump presidency would hurt international businesses,” he said. “When we learned about Trump’s surprise victory over Clinton, stock futures were tumbling, and we had an emergency meeting to talk about how to respond to panicky calls about the declining stock market.
“To everyone’s surprise, the stock market opened to huge gains. From the night before, we had signals up and down and a surprise reaction the day after the election.”
“Bottom line is that investors should not change course with a major election coming up,” agreed Johnson. “There does exist a presidential term effect, and returns have been historically highest in the year of a presidential election.”
“Don’t get caught up in speculation — avoid making wild bets based on what you think might happen,” cautioned Materazzi. “The market’s unpredictable… especially around elections. Stick with solid businesses you understand.”
Editor’s note on election coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: Financial Experts: 4 Money Moves To Make the Week Before the Presidential Election
