First, I can’t guarantee that a client’s gloomy prediction won’t come to be. Bad things do happen and we have had some bad presidents. The next administration may produce one of these nasty tenures. Because of this, I do not try to convince them that their scenario is wrong unless it is a really off the charts oddball story.

Second, I ask clients to think of a lousy presidency and describe all the bad things that happened. The favorites seem to be Presidents Nixon, Carter, George W. Bush and Obama.  

From there, I like to talk about what businesses were doing during the time mentioned. Times were tough, but they didn’t just close shop. They sought profits even if profits were tougher to come by. They innovated. They streamlined. They adapted to the conditions of the times.

Then I ask the client, “Then what happened?” Most readily admit that better times always follow bad, eventually, and usually faster than people think at the time. The adaptations allowed the strong to survive.

I’ll then point out that all four of those presidencies have something in common besides the awful things we recounted earlier. The S&P 500 hit an all-time high during each of those respective administrations. This is true of almost all presidencies, actually.

As bad as things got economically, politically or socially, it was never long before the markets were historically better than ever. More to the point, these highs were reached in far shorter periods of time than a typical client’s investment lifetime.

It isn’t all about the markets, of course, but a presidential election induced market drop is a common fear.

We say the President is the most powerful person in the world, but when it comes to sound long-term financial planning in a capitalist society, presidents just aren’t that powerful.

Think about it. How many presidents did NOT have an enormous incentive to have a growing economy and good markets? Despite this, we still have recessions and bear markets. It is actually quite likely that the economy and/or financial markets will perform poorly after the election. Fact is the markets do lousy quite often. There has only been one year since 1980 in which the S&P 500 didn’t drop 5 percent or more during the year. The average intra-year drop has been about 14 percent. Ten percent corrections, have occurred in more years than not.

In most cases, to blame these drops on the President, one needs to take an indirect path. The President can definitely exert influence, but the economy and markets are simply too complex for a U.S. president to drive their behavior in the straight-line way the fear mongers suggest.  

Statistics and facts can help sometimes when people are relatively calm, but if you wait until the intensity amps up, they may fall on deaf ears.

Market history is just one aspect of my discussions with clients. I also make sure we spend some time on the how the media portrays the contest. Most coverage is noise, but there are also important issues to address and legitimate journalists trying to report the conflicting sides accurately. Discerning the difference can be challenging.