Why Long Term Strategy Matters Through Election Cycles

With the U.S. presidential election just one week away and dominating headlines, it’s natural to feel uncertainty about what lies ahead. However, it’s important to focus on the bigger picture. History shows that while elections can cause short-term market fluctuations, long-term investment performance is driven by deeper economic fundamentals.

In the months and weeks leading up to and following an election, it’s common to see market volatility pick up as investors react to the uncertainty elections invariably create. The short-term fluctuations are driven by predictions, polls, and policy announcements, but these reactions are just that: short-term. Markets tend to recover quickly from election-related volatility, often returning to their long-term trends once the political dust settles.

More broadly, economic experts are increasingly in agreement that concerns over a “soft landing” or recession in the U.S. are fading. Despite global economic challenges, the U.S. economy remains strong and continues to push forward. The anticipated cycle of Federal Reserve rate cuts only strengthens this outlook.

Newport’s portfolios are designed to navigate volatility without relying too heavily on any single sector, offering diversification well beyond the typical stock and bond holdings that most Canadians have. This broad-based strategy spans 13 asset classes, ensuring greater stability and resilience. As it pertains to the equity markets, it’s also worth noting that even if tech stocks don’t fulfill lofty earnings expectations, there is growing strength in the broader market to balance this out.

Looking ahead, it’s essential to stay focused on long-term strategies rather than reacting to short-term market fluctuations. Newport’s Investment Committee prioritizes the key drivers of long-term success:

• Diversification;
• Proper valuations;
• Regular rebalancing; and
• Maintaining discipline through market volatility.

Markets reward patience and confidence, and assets benefit from a diversified approach that extends beyond traditional stock and bond market performance.

As we approach this election, our advice is simple: ignore the noise and resist the urge to react to political news. While there very likely to be volatility in the election’s aftermath than we’ve seen before, staying the course and avoiding emotional, short-term decisions are rewarded with higher long-term returns—and fewer sleepless nights.

To find out more about Newport’s unique investment approach, get in touch.