After the drama of the election, the new president will have to find a way to govern and will be judged on the success of his or her programs. Everyone will have an incentive to work together, despite the rancor we’re now seeing. History shows that mixed governments tend to be good for the markets, and it’s safe to say that’s what we can expect.
Despite the very real short-term risk of volatility and the potential policy uncertainties, the likely long-term outcome of the election is continued economic growth and consequent market gains. It’s normal and reasonable to react to short-term worries, but in the long run, any damage from the election is likely to be limited.
In fact, in many respects, politics is now acting as a headwind for the economy, and we can reasonably expect a bounce after the election. In the end, the current tumult should have little bearing on longer-term results, and the most damaging thing you can do to your portfolio is overreact.
Brad McMillan is the chief investment officer at Commonwealth Financial Network, the nation’s largest privately held independent broker/dealer-RIA. He is the primary spokesperson for Commonwealth’s investment divisions. This post originally appeared on The Independent Market Observer, a daily blog authored by McMillan.