It’s November 2nd, and it sure feels like something important is happening this week in the United States. Something that happens every four years, maybe?

Have you been following the news? I know, it’s not pleasant. As famed comedian John Mulaney likes to say, “it seems like people everywhere are mad about everything all the time.” Amen, Mr. Mulaney. Amen.

This election, at least in my lifetime, has created more anger and anxiety than any other I can remember. It’s more than enough to last a generation, and I’m certain that my kids will never forget it as they move toward the age where they can actually vote. Normally, I hate the hyperbole that comes with headlines and news story lead-ins like “It’s the most unprecedented election of our lifetime.” In this case, I think that may be underselling it. 2020 in America is a powder keg waiting to go off at any second, and this election is elevating the stress in the populace to an even higher level…and stress levels like that can cause irrational thinking at best, and horrible decision making at worst.

While the stories in every election are different, they often rhyme. (Don’t shoot the messenger on the narratives below. These were very real feelings at the time by the opposing parties and do not reflect my own feelings going into these respective elections.)

In 2000, Democrats wanted continued prosperity of the Clinton years by re-electing Gore. If that didn’t happen, the market was going to tank.

In 2008, Barack Obama and his radical, left-leaning, socialist agenda was going to tax-and-spend America into oblivion and the market was going to tank.

In 2016, Donald Trump and his bankruptcies and business failures where going to follow him into the White House and the market was going to tank.

You see the pattern, don’t you? None of these stories came true and all were designed to scare you into voting for one candidate or party over the other.

The level of concern is palpable, and Grant and I have continued our mantra that has held true in every election in modern history…the President of the United States, no matter what the different news outlets are telling you, has very little effect on the performance of the stock market. The stock market generally goes up. Not every day, not every year, but over a long enough time frame, betting against the stock market has proven to be a fool’s errand.

We’ve written about this quite a bit recently because it’s what our clients, friends, and families ultimately want to talk about the most. The September and October newsletters go into this in great detail, so we’ll spare you anymore numbers on the performance of the stock market after the election. But I do want to comment on market volatility leading up to an election and zero in on Grant’s quote from our last newsletter…

Jeff and I have received calls from clients concerned about the election. Yes, there is usually increased volatility in the weeks before the election, as the market does not like uncertainty. However, the stock market tends to calm down after a winner emerges as there will be fewer unknowns since investors only have to explore the potential actions one candidate, not two. According to a recent study from Goldman Sachs, the average post-election rally is 5%, regardless of who wins. ~Grant Glenn

The post-election rally numbers from Goldman Sachs are pretty easy to verify, but let’s discuss that volatility thing. Does market volatility actually go up before an election? Do we have the numbers to prove this?

Nick Magguli, Chief Operating Officer at Ritholz Wealth Management and founder of the blog Of Dollars and Data did the dirty work for us in his most recent post. WARNING: his piece is extremely data heavy and requires a lot of statistics to understand the level of analysis he is putting together. For the lay person, I’ll lay out the summary and the basics.

How is he defining volatility of the stock market? Through the use of 30-day standard deviation of the S&P 500. Standard deviation is the measure of how far away measurements of something move from their average. In this instance, how much does the stock market swing up or down compared to what is considered an average day, week, or month. The higher the number, the more volatile the market is.

He goes much deeper in his analysis, which is very refreshing. This first chart showed him what he expected to find, but he wasn’t satisfied because it left him with a bigger question. Why was market volatility going up in November in non-presidential election years? He dug deeper, stripped out data that potentially helped his case but made the conclusion muddier because he really wanted to know if what he was feeling was actually happening…it’s a great piece of analysis and an incredibly well written piece. And, at the end of the day, what you feel like you experience happening in the stock market actually shows up in the data - there is an increase in volatility leading up to every presidential election since 1950.

But, more importantly, his conclusion is even better:

While it’s clear that presidential elections tend to have some impact on market performance in the short run, whether you should do anything about them is another matter entirely.  After all, why would you make adjustments to your portfolio based on the outcome of a single election when you have decades of investing ahead of you?

Of course presidents can affect markets over the long run through policy changes, but what’s the likelihood that those policy changes will prevent you from reaching your financial goals?  Slim to none.   ~Nick Magguli

That last part is the most important aspect to investing and financial planning for the majority of people. What is the likelihood any of this will prevent you from achieving your goals? Almost zero. How much control over it do you have anyway?

Don’t get me wrong, elections are incredibly important and you should be exercising the greatest right you possess so that your voice is heard - go vote. But you can’t control the outcome of this election no matter how hard you try. You can control how much you save, you can control how you build out your financial plan and your investment portfolio, and you can control your discipline to stick to your financial plan and investment policy. And, maybe most importantly, you can control how you treat other people and the relationship you have with your family. If you’ve done that, then you’re way ahead of the game.

We’re in for a heck of week. For some, it may be easier to go back into Halloween mode and start re-watching every horror movie you can think of. Depending on how you handle this type of thing, you should be either getting your popcorn ready or boarding up the windows and doors.

As we watched the news last night in the Brainard household, my youngest (12 years old) looked at my wife and I and said, “I wish life could just be a little more simple, you know?”

Me too, buddy. Me too.

Noble Wealth Pro Tip of the Month

Heading into November means we all need to start getting our stretchy pants ready for Thanksgiving dinner and we also need to start going through our year-end tax planning checklist.

Do you have unrealized losses or gains in your portfolio that you could be harvesting?

Are you planning to give to charity this year and how much? What vehicle are using to make that gift?

Are you expecting an increase or decrease in your income for next year?

Are you expecting any large windfalls this year like inheritances, bonuses, stock options, etc.?

While the deadline to file you taxes isn’t until next April 15th, a lot of your tax planning strategies need to be completed by December 31st. Don’t wait until the last second.

Things We’re Reading and Enjoying

The Tim Ferriss Show - Matthew McConaughy

Matthew McConaughey (@McConaughey) is a Texas native and one of Hollywood’s most sought-after leading men. A chance meeting in Austin with casting director and producer Don Phillips led him to director Richard Linklater, who launched the actor’s career in the cult classic Dazed and Confused. Since then, he has won an Academy Award for his portrayal of Ron Woodroof in Dallas Buyers Club, appeared in more than 40 feature films that have grossed more than $1 billion, and has become a producer, director, and philanthropist with his Just Keep Livin’ Foundation—all the while sticking to his Texas roots and “jk livin'” philosophy.

John Mulaney, SNL Opening Monologue - February 29th, 2020

Because we all need a laugh now and then, and also because I can’t get his monologue from Halloween night on YouTube just yet, here is John Mulaney from earlier this year.