Goals-based planning

Navigating uncertainty: How to stay calm in election years

Presidential elections can be uniquely unsettling. Candidates campaign with different views of the future. Polling and predictions dominate new cycles. Pundits forecast policy and regulatory changes.

Adding to the noise and the uncertainty of our own election outcomes this year, 40% of the world’s population will head to the polls to vote for national leaders in 2024. 

With change on a global scale about to unfold, you may be tempted to pull back from plans you’ve made, or to postpone critical decisions until a future date when you hope to have more clarity. 

However, following through on these very human impulses may not be in your best interest.

Behavioral science can help us understand why such feelings surface at times like these—and teach us how to manage them.

Understand the forces at work

Uncertainty makes us feel confused, frustrated or even depressed. These emotions are triggered by our:

Aversion to risk—We tend to prefer certainty over uncertainty, and will sometimes go out of our way to avoid risk—even when it’s not to our advantage.

For example: We see clients holding on to cash instead of putting it to work in the belief that important financial decisions are best postponed until well after the election.

Need for control—We like feeling that we are in charge of our circumstances, and periods of uncertainty intensify our desire for control. This, in turn, often prompts us to take action—to do something, anything—to maintain a sense of control.

For example: Despite knowing that market timing is a risky strategy, clients with strong political views and who closely follow the news often want to make real-time adjustments to their portfolios as election-related events unfold, such as shifts in the near-term outlook for particular industry sectors.

Either/or thinking—Elections tend to make us think in all or nothing terms. We become overly optimistic about the benefits of a win by our preferred candidate—and overly catastrophic about the fate of the country if the opposing candidate wins. At the same time, this either/or thinking can intensify our anxiety and push us to make decisions we otherwise would not consider.

For example: In 2016, many clients pulled out of the market ahead of the national elections—only to return months later, after the results were in. Meanwhile, financial markets rebounded the day after votes were cast.

All of these reactions are normal, and we all feel them.

But it is possible to navigate these feelings, return to a sense of calm—and invest smartly. Adopting these proven strategies can help:

Look to the past for reassurance

Historically, stocks tend to perform well in election years. While there may be short-term volatility around Election Day, the events themselves have minimal influence on financial markets in the medium and long terms. Near-term spikes and valleys tend to smooth out over time. As these charts show:

Election jitters? Markets tend to rally as uncertainty fades

S&P 500 moves around U.S. elections since 1984, Indexed to Election Day

This chart shows the S&P 500 performance around U.S. elections since 1980, Indexed to Election Day.
Source: Bloomberg Finance L.P. Analysis as of January 18, 2024. Past performance is no guarantee of future results. It is not possible to invest directly in an index.

S&P 500 and sector performance dispersion by Presidential Administration

1990-2023, calendar year total returns, maximum, minimum and average returns

The chart illustrates the performance of various sectors of the S&P 500 index during different political administrations.
Source: White House, FactSet, J.P. Morgan Asset Management. Due to data constraints, real estate return data begins in 2002. Data are as of December 31, 2023.

Stock returns don’t tend to differ much in election years

S&P 500 average annual price returns, 1928-2023, %

The chart shows the S&P 500 average annual price returns from 1926-2023 in election years versus non-election years.
Source: Bloomberg Finance L.P. Data as of December 31, 2023. Past performance is no guarantee of future results. It is not possible to invest directly in an index.

Focus on what you can control

We recognize that having reliable market data can ease concerns about election outcomes, but only to a certain degree, as charts, figures and numbers provide answers that satisfy the logical part of our brain.

These three strategies can help you manage the strong emotions that uncertainty about the future can trigger:

  1. Construct a financial fortress—Take concrete steps to create psychological safety for yourself and your loved ones. Start by taking stock of your absolute certainties and revisiting your risk preferences and investment allocations. Involve your J.P. Morgan team in this process:
    • Request a portfolio review. The more comfortable you are with your holdings (asset allocation, level of risk, time horizon, duration), the more likely you are to remain invested and avoid making emotion-driven moves.
    • Prioritize tax efficiency. Taxes are likely to go up regardless of who wins the election. Carefully investigate the potential for tax savings both in your investments and across your entire balance sheet to maximize the opportunity. 
       
  2. Keep personal goals front and center—Focusing on personal goals and how to accomplish them is a proven way to regain a sense of control, and to ensure that your needs and desires are taken care of, regardless of market performance:
    • Take advantage of Wealth Plan Plus, J.P. Morgan’s proprietary planning tool, to calculate the asset allocation, risk tolerance and time horizons for each of your goals, and to gain a higher level of control than you might otherwise have.
    • Establish an emergency/rainy day fund if you don’t already have one.
    • Plan for upcoming life events, such as a wedding, family trip or business launch, to ensure their success. 
       
  3. Lean on people—In times of uncertainty, we seek safety in people. Work closely with your professional advisors, trusted family members or others to maintain both your financial and emotional balance in turbulent times.

We can help

As Richard Madigan, J.P. Morgan Private Bank’s Chief Investment Officer, reminds, “successful investing focuses on policy, not politics.” 

Regardless of which candidate wins an election, opportunity is created. We look at the potential that is created through regulatory changes, and capture these opportunities for our clients so that they can capitalize on them. We’ll work closely with you to ensure that your needs and desires are taken care of, regardless of what happens in the market.

Uncertainty is part of everyday life. Some of the most effective antidotes for feeling overwhelmed are to set and prioritize goals, focus on what you can control, and maintain a long-term perspective. Your J.P. Morgan team is ready to help guide you toward the future you envision.

Presidential elections can magnify our concerns—about markets, economies, taxes and more. Behavioral science can teach us how to stay calm during turbulent periods.

EXPERIENCE THE FULL POSSIBILITY OF YOUR WEALTH

We can help you navigate a complex financial landscape. Reach out today to learn how.

Contact us
Important Information

The information presented is not intended to be making value judgments on the preferred outcome of any government decision or political election.

Standard and Poor’s 500 Index is a capitalization-weighted index of 500 stocks. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

This material is for informational purposes only, and may inform you of certain products and services offered by private banking businesses, part of JPMorgan Chase & Co. (“JPM”). Products and services described, as well as associated fees, charges and interest rates, are subject to change in accordance with the applicable account agreements and may differ among geographic locations. Not all products and services are offered at all locations. Please read all Important Information.

General Risks & Considerations

Any views, strategies or products discussed in this material may not be appropriate for all individuals and are subject to risks. Investors may get back less than they invested, and past performance is not a reliable indicator of future results. Asset allocation/diversification does not guarantee a profit or protect against loss. Nothing in this material should be relied upon in isolation for the purpose of making an investment decision. You are urged to consider carefully whether the services, products, asset classes (e.g., equities, fixed income, alternative investments, commodities, etc.) or strategies discussed are suitable to your needs. You must also consider the objectives, risks, charges, and expenses associated with an investment service, product or strategy prior to making an investment decision. For this and more complete information, including discussion of your goals/situation, contact your J.P. Morgan team.

Non-Reliance

Certain information contained in this material is believed to be reliable; however, JPM does not represent or warrant its accuracy, reliability or completeness, or accept any liability for any loss or damage (whether direct or indirect) arising out of the use of all or any part of this material. No representation or warranty should be made with regard to any computations, graphs, tables, diagrams or commentary in this material, which are provided for illustration/ reference purposes only. The views, opinions, estimates and strategies expressed in this material constitute our judgment based on current market conditions and are subject to change without notice. JPM assumes no duty to update any information in this material in the event that such information changes. Views, opinions, estimates and strategies expressed herein may differ from those expressed by other areas of JPM, views expressed for other purposes or in other contexts, and this material should not be regarded as a research report. Any projected results and risks are based solely on hypothetical examples cited, and actual results and risks will vary depending on specific circumstances. Forward-looking statements should not be considered as guarantees or predictions of future events.

Nothing in this document shall be construed as giving rise to any duty of care owed to, or advisory relationship with, you or any third party. Nothing in this document shall be regarded as an offer, solicitation, recommendation or advice (whether financial, accounting, legal, tax or other) given by J.P. Morgan and/or its officers or employees, irrespective of whether or not such communication was given at your request. J.P. Morgan and its affiliates and employees do not provide tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any financial transactions.

© $$YEAR JPMorgan Chase & Co. All rights reserved.

LEARN MORE About Our Firm and Investment Professionals Through FINRA Brokercheck

 

To learn more about J.P. Morgan’s investment business, including our accounts, products and services, as well as our relationship with you, please review our J.P. Morgan Securities LLC Form CRS and Guide to Investment Services and Brokerage Products

 

JPMorgan Chase Bank, N.A. and its affiliates (collectively "JPMCB") offer investment products, which may include bank-managed accounts and custody, as part of its trust and fiduciary services. Other investment products and services, such as brokerage and advisory accounts, are offered through J.P. Morgan Securities LLC ("JPMS"), a member of FINRA and SIPC. Insurance products are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. JPMCB, JPMS and CIA are affiliated companies under the common control of JPMorgan Chase & Co. Products not available in all states.

 

Please read the Legal Disclaimer for key important J.P. Morgan Private Bank information in conjunction with these pages.

INVESTMENT AND INSURANCE PRODUCTS ARE: • NOT FDIC INSURED • NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY • NOT A DEPOSIT OR OTHER OBLIGATION OF, OR GUARANTEED BY, JPMORGAN CHASE BANK, N.A. OR ANY OF ITS AFFILIATES • SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED

Bank deposit products, such as checking, savings and bank lending and related services are offered by JPMorgan Chase Bank, N.A. Member FDIC.

Not a commitment to lend. All extensions of credit are subject to credit approval.

Equal Housing Lender Icon