How does the presidency impact the stock market? A financial expert weighs in | KOB 4

How does the presidency impact the stock market? A financial expert weighs in

Casey Torres
Updated: October 24, 2020 09:19 PM
Created: October 24, 2020 09:02 PM

ALBUQUERQUE, N.M.— Every four years, campaign signs take over polling locations around the country, but considering which president to pick can bring up questions surrounding their potential impact on the economy.

"[With] presidential elections, people tend to think that they have a correlation to the stock market, or whether or not a Republican is in office versus a Democrat is in office—it's gonna have effects,” said David Hicks, a financial expert with Oakmont Advisory Group.


Hicks said that’s not exactly how it works.

"The market doesn't care whether a Republican or Democrat is in office. Really, it's just different viewpoints and different governing styles that do affect certain law, but at the end of the day, the market is gonna do what it's gonna do,” he explained.

However, presidential races can have an impact on people’s wallets by stirring their emotions.

“That can actually lead to making big, major adjustments with investments because often times people tend to get things wrong. They tend to buy high and sell low, all because our emotional behavioral mistakes,” said Hicks.

That’s why Hicks advises people to try not to let their feelings get to them and their money.

When it comes to investing in the stock market, Hicks said certain age groups can make riskier investments than others.

Since the market can act like a roller coaster, people in their 20s and 30s can make risky investments because they have time for it to change. However, people close to retiring or in retirement have to take it easy and really consider their investments.

Hicks said people can use the “Rule 100” to decide how much of their money should go to the market.

"You take your age. Subtract 100 from it, and that's how much of your portfolio should be in riskier assets,” he said. "So if you're 30, subtract that from 100. Seventy percent of your money could be in equities, or stocks—something more risky— then the rest can be in more conservative decisions.”

When you’re older, flip the equation. For example, if you’re 70 years old, 30% of money should be in risky business.

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