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First, let’s start by acknowledging that these are politically-charged times and, unfortunately, the U.S. is a politically divided country. Hopefully, that will change for the better in the future, but today’s reality is different and negative.
Second, what follows is not a partisan conversation. There will be no criticisms or endorsements of either party. Rather, this is an examination of how voters deal with market volatility and how they perceive their retirement readiness. It’s a worthy exercise because a case can be made that someone that is even modestly politically active is apt be more engaged with their investments.
At the intersection of investing and political engagement resides a fine line of knowing when it’s appropriate to make investment decisions based on political goings on and when it’s a bad idea to do so. Peruse enough social media platforms where investing talk is prevalent and one will discover some investors have been rather impetuous this year. Many sold at the height of President Trump’s tariff rhetoric, which was a nadir for stocks.
So while those investors are stay abreast of current affairs and fancy themselves as politically savvy, some are prone to let political emotions and leanings inform their investment decisions. Advisors and experienced investors know that when emotions of any variety and investing mix, the outcomes are usually bad for market participants.
Fortunately, most voters don’t let political events breed rash investment decisions and that’s true of both buying and selling securities.
Most Voters Staying the Course
A recent BlackRock retirement survey indicates that the post-Liberation Day turbulence endured by U.S. equity markets didn’t lead to impulsive behavior pertaining to retirement accounts.
(Image Courtesy: BlackRock)
So either 90% of those polled did nothing or invested more amid the April tariff calamity – an impressive percentage considering the relevance of behavioral finance and the element of political theater investors are dealing with.
Regarding behavior, an interesting point in the BlackRock survey is that respondents aren’t obsessing when it comes to checking retirement accounts. Just 41% said they look at retirement accounts once a month or more. Even in the 55-64 age group, that percentage climbs to just 50%, signaling that with age comes wisdom and many investors are approaching retirement with the long view and they want be daunted short-term political headlines.
Buying the Dip (or Not) a Bipartisan Affair
Buying market dips or not doing so shouldn’t be partisan endeavors, though it’d be interesting to see if research emerges suggesting there is some science behind which party’s voters are more apt to buy following large pullbacks.
The BlackRock survey confirms the lack of partisanship regarding dip buying with 48% of voters agreeing that they’ll be stocks when they appear cheaper following retrenchments with 50% disagreeing with that sentiment.
Where things get interesting regarding buying the dip or no – this is something for advisors to be aware – is the gender split. Sixty-three percent of men said they’re comfortable buying significant dips, but just a third of women said the same.
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