Election results can bring a wide range of emotions. Depending on the outcome, some investors may feel encouraged about the direction of the country, while others may feel uncertain or concerned about what comes next. Regardless of where you fall, there is one important distinction I want every investor to remember: Your political emotions and your investment decisions should never become the same thing.
At SecondHalf Coach Wealth Management, our responsibility isn't to predict every turn in the road. It's to help our clients see clearly enough to navigate it.
During a recent By Your Side Chat, I was joined by two members of our wealth management team, Bree Edgerly, Business Development Manager, and Jared Gerger, Investment Assistant, to discuss the immediate aftermath of the election, what markets may be telling us, and how we're approaching the evolving economic and political landscape.
As we continue our three-part conversation about elections and the markets, I believe this is an important time to step back, look beyond the headlines, and focus on what truly matters to investors.
The Election Is Over, but the Implications Are Still Developing
One of the biggest distinctions I made during our conversation is that an election tells us how governing power is distributed. The weeks and months that follow tell us how that power will actually be used.
With a divided federal government, legislative priorities, negotiations, and policy decisions will become important areas to watch. While election results can create immediate reactions, the longer-term investment implications often depend on what happens next.
Historically, markets have performed reasonably well during periods of divided government. One possible explanation is that divided government can create checks and balances that make sweeping legislative changes more difficult. When the potential for extreme policy shifts is reduced, investors may have a clearer framework for evaluating what lies ahead.
That doesn't mean every period of divided government produces positive returns, or that political developments no longer matter. It simply reinforces the importance of looking at the broader historical picture rather than reacting to a single election outcome.
Why Markets Don't Always React the Way We Expect
A question Jared raised during our conversation was particularly important: If investors anticipated the election results, why might markets still react significantly once those results become official?
The answer comes down to expectations.
Markets are forward-looking. Investors are continuously evaluating probabilities and positioning portfolios based on what they believe may happen in the future.
Interest rates provide a good example. If investors expect the Federal Reserve to lower rates, markets may respond positively before a rate reduction actually occurs. By the time the announcement is made, much of that expectation may already be reflected in market prices.
The same concept applies to corporate earnings. A company can report record earnings and still see its stock decline if investors were expecting even stronger results.
With elections, the initial market reaction isn't necessarily the lasting one. What matters more over time is how political developments influence economic conditions, corporate earnings, business confidence, and future growth opportunities.
In other words, knowing the outcome and anticipating the outcome are two different things. Once uncertainty begins to clear, investors can start evaluating what actually comes next.
Looking Beyond Washington: The Economic Indicators That Matter
While elections naturally attract attention, they aren't the only factor influencing markets. There are several broader economic indicators I believe investors should continue watching.
Corporate earnings remain important.
Historically, corporate earnings have maintained a strong relationship with stock market performance. When businesses are growing, generating revenue, and demonstrating the ability to increase profitability, that can provide an important foundation for the market.
Artificial intelligence continues to create opportunities beyond technology companies.
I believe we're still in the relatively early stages of AI investment. While much of the attention has focused on the companies developing AI technology, the expansion also creates demand across supporting industries.
Think about the infrastructure required to support this growth: copper for electrical wiring, cooling systems for data centers, energy production, and the construction necessary to support additional computing capacity. These are important pieces of a much larger investment story.
How We Approach Portfolio Management: Opportunistic, Not Emotional
One of the most important parts of our conversation centered on how we actually manage portfolios when markets become volatile or political developments create uncertainty.
At SecondHalf Coach Wealth Management, we believe in building portfolios around a diversified foundation while maintaining the flexibility to pursue opportunities in specific sectors and industries.
A significant portion of our portfolios is built around a diversified core. From there, we use additional portfolio components to increase exposure to areas where our research indicates stronger opportunities may be developing.
Over the past several years, some of the areas we've emphasized include technology, semiconductors, artificial intelligence, robotics, and aerospace and defense.
However, portfolio construction isn't about deciding that one industry will always outperform another. It's about continually evaluating where opportunities are emerging and where adjustments may be warranted.
For example, a pullback in technology stocks recently created an opportunity for us to reassess certain individual stock positions within our GameChangers model. Rather than allowing short-term market movements to dictate our decisions, we evaluated the companies, considered their longer-term potential, and made selective adjustments.
We can make changes within specific portfolio components without necessarily changing the broader diversified foundation.
That flexibility is important. If another sector begins to demonstrate stronger potential, we may adjust our exposure accordingly. Similarly, changes in regulations, economic conditions, or corporate earnings expectations can influence how we evaluate an investment.
The goal isn't to react to everything that happens. It's to recognize where thoughtful adjustments may create opportunities.
Control What You Can Control
During our conversation, I shared a lesson that I wish I had understood earlier in my career: Control what you can control.
As an investment manager, I cannot control election results, geopolitical conflicts, energy prices, or what a corporate executive says during an interview. Spending too much time worrying about those things takes attention away from the areas where I can actually make a difference.
I believe the same principle applies to investors.
We cannot control what happens in Washington or how the market responds to every headline. What we can control is how we prepare, how we evaluate information, and how we make decisions.
I often say that our approach isn't optimistic or pessimistic. It's opportunistic.
If markets are rising, we ask where the opportunities are. If markets are falling, we ask the same question. If volatility increases or political leadership changes, we evaluate what those developments mean and whether they create opportunities worth considering.
Our responsibility is to apply research, logic and discipline rather than allowing emotions to dictate investment decisions.
Three Questions Investors Should Be Asking
Bree raised another important point during our discussion: What should investors be thinking about while the political and economic implications of the election continue to develop?
I believe there are three questions worth considering.
1. Have my financial goals changed?
Has the election changed what you're trying to accomplish financially? Have your retirement plans, family priorities, or expectations for your investments changed?
If your goals remain the same, an election result alone may not create a reason to change your investment strategy.
If something has genuinely changed, it's important to communicate that to your financial planning team.
2. Have my investment objectives changed?
Consider what you need your portfolio to accomplish. Are you still working toward the same objectives? Has your time horizon changed? Are your expectations different?
These are important conversations that should be driven by your financial circumstances and long-term priorities, not simply by the latest political headlines.
3. Has my ability or willingness to tolerate risk changed?
I want to make an important distinction here. Your ability to handle risk and your willingness to handle risk are two different things.
Your financial ability to withstand market fluctuations may not have changed at all. However, your emotional comfort with those fluctuations might feel different depending on what's happening around you.
I've worked with investors who felt comfortable with a certain level of risk one day and significantly less comfortable the next. Sometimes, that change is connected to an actual change in their financial circumstances. Other times, it's a reaction to uncertainty.
Neither should be ignored. But understanding the difference is essential to having a productive conversation about your portfolio.
If your comfort level has changed, communicate that with your advisor. Those conversations allow us to better understand your concerns and evaluate whether anything within your financial plan needs to be revisited.
Be Mindful of Where You're Getting Your Information
Another point I emphasized during our discussion was the importance of being thoughtful about the information we consume.
We live in an environment where news, opinions, and predictions are constantly competing for our attention. Social media can be a wonderful way to stay connected with friends and family, but it isn't always the best place to seek reliable financial or economic information.
Just because someone shares something we agree with doesn't necessarily make it accurate.
Algorithms, headlines, and emotionally charged commentary can make certain stories feel more urgent or significant than they actually are. For investors, that can create unnecessary pressure to react.
This is one of the reasons we started our By Your Side Chats. We want to provide clients and our community with a consistent opportunity to hear our perspectives, understand the information we're evaluating, and learn how we're applying that information to portfolio management and financial planning.
Our goal isn't to entertain, create anxiety, or predict every market movement. It's to provide perspective, share our research, and help strengthen the relationship we have with the people we serve.
Looking Ahead: The Commitment Doesn't Change
As some of the uncertainty surrounding the election begins to clear, there is still plenty of road ahead of us. Policy decisions, economic developments, corporate earnings, and market conditions will continue to evolve.
Over the coming weeks, our team will continue evaluating portfolio positioning, meeting with industry professionals and outside research partners, and considering what these developments may mean for our clients.
We'll also continue sharing what we're learning through our By Your Side Chats.
The headlines will change. The political landscape will change. Markets will rise, fall, and experience periods of uncertainty. But our commitment to our clients remains the same.
Our responsibility is to remain disciplined, attentive, prepared, collaborative, and opportunistic through it all.
At the end of the day, that's not just our investment philosophy. It's the promise behind our name: to be by your side through it all.