Avoid the Midterm Election Trap

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Midterm elections are upon us. I’m here to warn you… don’t fall for the trap.

What trap am I referring to? It’s one I see investors fall for time and time again – letting politics determine their investment strategy.

Some of you are already sneering. I can feel it. And I understand. Politics is an emotional and divisive topic.

But I’ve observed something after working with thousands of investors across several administrations: Making an investment decision based on your political beliefs is a great way to lose money.

Presidential elections generate the most knee-jerk reactions.

With (insert newly elected president) in charge, this country is going to hell in a handbasket! I’m selling my stocks.”

I’ve heard some variation of it more times than I can count. Republican. Democrat. It doesn’t matter. The trap has been sprung.

Don’t think midterms are immune. I’m already hearing grumblings. Massive Republican gains in Congress were widely expected earlier this year, but their prospects have dimmed. If you’re one to believe polls or odds makers (I prefer the later), Republicans are still largely expected to take control of the House, and more modestly favored in the Senate.