Three Weeks Until the Midterms

Three weeks from now, the midterm elections will be behind us.

What won't be behind us is the uncertainty that often surrounds the days and weeks leading up to major elections.

Investors have strong opinions about what election outcomes could mean for taxes, regulation, interest rates, economic growth, and the stock market. The challenge is that markets don't simply react to who wins or loses. They react to expectations, surprises, and sometimes completely unrelated events.

That creates the potential for volatility.

Will it happen this time? Nobody knows.

But after more than four decades of watching markets, I've learned that periods of uncertainty deserve respect, not prediction.

If you're retired or approaching retirement, this may be a good time to review your financial plan and ask yourself a few questions:

• How would I feel if the market dropped 10% or 35%?

  
  

• Am I relying on market assets that I may need to spend in the next few years?

  
  

• Do I have adequate cash reserves?

  
  

• Is my current allocation consistent with my actual risk tolerance?

  
  

Preparation is different than forecasting.

I'm not suggesting anyone should try to predict the election or make emotional decisions based on political headlines. In fact, history shows that emotional reactions are often costly.

Instead, focus on readiness.

The investors who navigate volatile periods most successfully tend to be the ones who have already thought through their strategy before volatility arrives.

Three weeks isn't enough time to know what the election results will mean.

It is enough time to make sure you're prepared for whatever comes next.

Fred Quinn

Serious Money Ohio

"Hope for the best. Prepare for the unexpected. That's usually a good investment strategy."