With one week until the US Presidential elections, investors may believe that changes to their portfolio are warranted.
History, however, suggests otherwise.
Yes, short term volatility tends to rise around elections. But investors' returns over the intermediate and longer term have not typically been impacted by elections -- even when the result is a "divided" government.
Likewise, the party in the White House hasn't been a big determinant of equity market returns, either.
Below are the scenarios that have existed over almost 100 years:
Situation S&P 500 Avg % Rtn
Unified Republican (13 yrs) 14.52%
Unified Democrat (34 yrs) 14.52%
Divided w/ Rep. President (33 yrs) 6.99%
Divided w/ Dem. President (14 yrs) 15.94%
The takeaway: Short term volatility reflects uncertainty.
But throughout history, long term returns have been more likely to reflect company fundamentals.