Tim Hoyle, CFA, Chief Investment Officer
thoyle@haverfordquality.com
I Invested…Early and In-Person
The Aurora General Advertiser, a Philadelphia paper published by Benjamin Franklin’s grandson Benjamin Franklin Bache, wrote in 1796, “If ever a nation has suffered from the improper influence of a man, the American nation has suffered from the influence of Washington. If ever a nation was deceived by a man, the American nation has been deceived by Washington. Let his conduct then be an example to future ages.1”
Washington’s political rival, Thomas Jefferson, despite his likely agreement with the anti-federalist Advertiser’s sentiment stated several years later, “Nothing can now be believed which is seen in a newspaper. Truth itself becomes suspicious by being put into that polluted vehicle.2”
A hundred years later, Teddy Roosevelt revolutionized White House-media relations and courted the press corps like none of his predecessors. He hosted informal press conferences during his afternoon shave and used the muckrakers of the early 20th century to advance his political agenda.
Woodrow Wilson, who ran on an “America First” agenda wanted “authority to exercise censorship over the Press to the extent that that censorship…is absolutely necessary to the public safety.3”
Politics have always been charged, the media has always been accused of exhibiting a bias, and politicians have always used hyperbole to mobilize their voters. This week, we will proudly vote in the 2020 general election and while talk of coups, conspiracies, sedition, and existential threats may inspire you to vote, don’t let them inspire you to alter your investment strategy.
Economies and markets are more likely to exert control over Presidents than Presidents are to influence them. Please don’t let partisan politics get in the way of your long-term financial success. Below are three simple ideas we would like you to remember in what will likely be a very remarkable week.
Invest non-partisan. The accompanying chart depicts investment returns of the S&P 500 since 1928. If an investor had invested $1 in the market in 1928, left it invested during every year a Republican held office, but went to cash during Democratic administrations, it would have grown to $30 by 2019. An investor in only Democratic administrations would have fared much better. This is due in large part to the data’s starting point directly before the Crash of 1929 and the Great Depression (when Republican Herbert Hoover held office) and because Democrats have held office for more years. Ds and Rs aside, staying invested is the key. The non-partisan investor who held through all administrations ended up with 30 times more wealth than the partisan investor.
Source: Haverford and FactSet Research Systems
Invest early. I can remember the first time I voted, I was 6 and I voted for Ronald Regan in 1984. Of course, I was in the booth with my Dad and he told me who to vote for, but that memory sticks with me to this day. My Dad was just as proud showing me the voting process as I was to pull the lever. I wish my Dad would have had the foresight and resources to go with me from the booth to the broker to learn about investing. Every year you delay investing can have a drastic effect on your wealth. Using the previous example of investing starting in 1928, that $1 is worth $5,000 today. But imagine instead you made the reasonable decision to sit out the Market Crash, the Great Depression, and the Second World War and instead invested the same dollar in 1945. Today you would have $3000 – 40% less.
Source: Haverford and FactSet Research Systems
Invest In-Person. I admit it, sometimes I skip voting in primary and off-cycle elections. I also sometimes skip flossing and annual physicals with my primary care physician. Unfortunately, I also sometimes skip opportunities to reassess my financial health. It is important to stay “in-person,” involved, and on top of your financial plan, goals, and investment strategy. Please take the time before year-end – and who can’t wait for 2020 to end? – to perform a financial check-up. My colleagues at Haverford are here to assist you.
1 https://washingtonpapers.org/fake-news-newspapers-and-george-washingtons-second-presidential-administration/
2 https://www.washingtonpost.com/news/the-fix/wp/2017/02/17/trumps-war-with-the-media-isnt-new-thomas-jefferson-railed-about-newspaper-lies-too/
3 https://www.history.com/news/presidents-relationship-with-press
