Stocks will plunge if Donald Trump is elected President. And the bond market could capsize if Trump goes ahead with plans to renegotiate the national debt. Yeah, but if Hillary Clinton wins the White House, she’ll cripple the economy by hiking taxes by $1 trillion. And oh, by the way, her foreign policy will end up destroying the world. As these are actual statements made by famous investors—like billionaire Mark Cuban and Swiss investment adviser Marc Faber—it’s understandable if you’re worried that the outcome of the election could upend your portfolio.
But while the inhabitant of 1600 Pennsylvania Avenue can alter the lives of billions of people, history says presidential politics have a surprisingly small impact on your portfolio. “There’s no empirical evidence to suggest that who the President is, whether Republican or Democrat, should cause you to want to deviate from your investment strategy,” says Gregg Fisher of the investment firm Gerstein Fisher. The fact is, stocks generally rise over time no matter who’s in charge (see the chart below). After the silly season is over on Nov. 8, about half the country will be elated, and nearly half will be scared. And both groups, research shows, are likely to tweak their investments accordingly. That’s when things really get risky.
The key to your success this year is understanding that your emotional reaction to the election—not who actually wins it—is what truly matters. How can you keep politically charged rhetoric from getting the better of you? Adopt these three planks in your investment platform to make your portfolio great again.