It’s election year for the world’s largest economy and we’re only a month away from discovering who’ll become the 45th president of the United States. Headlines are intently focused on the campaign with many wondering what impact if any, the results may have on markets and investor portfolios. Regardless of election impact, history indicates that markets are resilient in the face of any one event.
For all of the headlines and uncertainty surrounding this election, the American economy still reigns supreme, rivaled only by China. Past trends dictate that market turmoil is not unusual in years when a new president is elected and investors should remember volatility is often only perceptible in the short term.
For Canadians, investing in American markets provides a greater range of choice. For example, consider dividend-paying stocks. The number of dividend-paying stocks available in the United States exceeds those available in the Canadian market by a noticeable margin. Due to their large economy, investors should look south to access this broader selection.
When it comes to intelligent investing, a diverse portfolio is a strong portfolio. No one asset class or geographic region can be a winner all the time. A great strategy for succeeding over the long term is to balance your investments throughout a range of classes.
The American presidential campaign can be an interesting process but that doesn’t mean Canadian investors should give in to unnecessary concern or throw caution (and sound investment advice) to the wind. The long and short is to remember the election is merely a momentary blip on the radar.