Navigating Uncertainty in the Post-Election Economy

We've got the presidential election coming to a close (one can hope) by the end of this week.

This country is very divided. Based on the extreme left and right and everything in between, I am concerned, as I'm sure you are, about how this will land.

The election decision may not be finalized on November 6th, the day after voting. It may be anywhere from several days to weeks. If it goes into legal battles, it could last two months, maybe to the first of the year (See the 2000 election with Bush Jr and Gore for precedence). 

How can investors prepare and position themselves amidst such uncertainty? What moves need to be made? What economic scenarios are to be anticipated and prepared for? 

Make a Decision, Decrease Uncertainty

There's a lot of unpredictability today for our country. This election alone brings many distractions. Friendships are often tested when discussing politics today.

The markets themselves cannot make decisions. A clue on how people are finding it difficult to make decisions.

Some people want to wait to make certain decisions until after the election results. But many times, the decisions they need to make are more personal.

Do I send my kid to a particular college? Will I have enough money to do so? Can I make a move in my business? Can I expand (or scale back)? Should I make a particular investment today?

The concerns over how much the election results will affect our lives are very paralytic across the board. But how much relevance does the election actually hold for investors? 

Certain things will unfold after the election, regardless of the outcome. The continued deficit spending by the Federal Reserve, the Treasury, and our government representatives to manipulate the markets is a given, no matter who is elected.

These can't continue forever. They have only been able to keep the economy afloat using the perceived health of the stock market.

This only helps about 20% of the populace because that’s the percentage of people with any assets invested in the stock market.

The same is true in real estate or precious metals. The other 80% of the population cannot utilize what's promulgated in the marketplace. 

Reversion to the Mean – All Time Highs Will Correct

We’ve seen asset bubbles in all classes in the last several years. The financial markets are still riding high, with increasing fluctuation and volatility recently.

I think that's a sign that we're getting closer to the end of this cycle when whoever's in charge will take their foot off the pedal and say, “Okay, now it's time for a reality check.”

Whoever is elected will let things fall and return to reality because there's no election on the line. As long as there are elections on the line, the political parties will do all they can to make it look like everything's good because no one will vote for a party in place if the economy's falling apart.

Once the election is over, there will be nothing to keep the house of cards from falling. The dominoes will cascade.

I expect a significant correction in the financial markets. It could be anything from a 20-50% drop. I can't predict precisely how much or when, but all the artificial means of propping things up will take a hit.

We've already seen a correction in commercial real estate because it’s an inefficient marketplace that is not driven as much by sentiment. It’s more based on fundamentals. 

However, asset prices can be stoked heavily by lowering interest rates, which the Federal Reserve is trying to do now. They’re trying to play both sides of the issue – fight inflation while avoiding a recession.

There's no way the Federal Reserve can do both. A soft landing is not in the cards.

After the election, there will be a lot of change in the economy and the marketplace, irrespective of who wins the election.

The Investor’s Election Playbook – Focus on What You CAN Control

My best advice? 

Don’t let the election be an excuse to delay decisions that you know you need to make. Don’t worry about the  things that we can't control. I focus on what I can control and what I have jurisdiction over. And it's certainly not the election, the economy, the political climate, etc. 

What you can control is your own economy and the economies around you or who you surround yourself with. It's the business I own and manage that I can control. It's how and where I decide to invest my capital.

You must take charge and make the moves that are most propitious in a marketplace. This includes dynamic options, as I believe the economy will be very volatile over the next years.

We're not returning to a stable point where we have these long runs of an up market with a regular market cycle correction, and then we have another run up again.

We're going to see much more volatility. A downturn is in the cards, and long-term inflation is likely. Learning how to hedge your business, practices, personal finances, and outside investments will be a requirement going forward. 

Learn From Experts Who Have Navigated Recessions and Bad Policy Decisions Before

The old models of being a passive investor or passive in anything in life are past. Many people won’t feel comfortable because complacency is easy. Saying, “Well, I'll just let someone else take care of it. I'll just put my money over here and let the market take over.”

Those days are over.

You must become a student of the economic environment and how to hedge because no one investment will take care of you or anyone else completely. No 401(k), money market, ETF, or index fund can fully care for you.

Diversification in asset classes that one understands and has studied is essential. That's where I am. That's where I will lead my tribe and my family as we go forward.

I'm hosting a webinar next week Wednesday, November 14th, at 7 pm. With enough time to see where this election falls. Hopefully, we'll have a decision by then.

I will have three experts with me that evening. I won't name them right now, but I want to prepare you to put November 14th on your calendar.

If you'd like to participate in a webinar with experts and me to discuss:

• The future of the economy and markets (a roller coaster ride or straight shoot down?)
• The political arena and how it affects our respective businesses and families.
• And how to create a legacy and pass on wealth successfully (intergenerational wealth).

You can register here. I hope to see you then.