It’s finally over. Now what?

Joe Biden, 2020 Democratic presidential nominee, left, and wife Jill Biden, wave as they exit an election night party in Wilmington, Delaware, U.S., on Wednesday, Nov. 4, 2020. President Donald Trump has once again defied polls and predictions, with a strong showing across the Sun Belt in early results appearing to significantly shrink Biden's path to victory. Photographer: Stefani Reynolds/Bloomberg
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Joe Biden has been elected president of the United States. Some of your clients are dancing in the streets, and others are expecting the end of the world. Both reactions, from an investing perspective, are probably overblown.

For your clients who are out standing on the window ledge, remind them that historically, the stock market hasn’t really cared too much whether the occupant of the White House was a Republican or a Democrat. For the last 90 years, the steady trend has been upward, with inevitable and unpredictable interruptions every few years. Indeed for the past few days, equity markets have largely shrugged off the uncertainty over the election. It seems likely that the markets will absorb this latest political event and continue doing what they do best: pricing investments based on all the known data as it becomes available.

For your clients who are popping open the champagne, it’s probably worthwhile to remind them that we are still, in all likelihood, looking at a divided government, since it appears that the GOP is likely to hang on to a slim majority in the Senate and the Democrats look like keeping control of the House. Remember, the president cannot raise or lower taxes or do much else of a permanent nature without getting a majority of both chambers of Congress to go along. The balance of powers written into our Constitution is a beautiful thing; it insulates our clients — and their portfolios — from the actions of any individual, including the president.

Big changes to regulations and retirement planning could be in the mix following the Democrat’s election victory.
November 7

And most importantly for all our clients, both the ones who are buoyant and those who are disappointed, we need to keep telling them what we should be telling them every day, during election years and every other year: Focus on what you can actually control. Diversify, rebalance, evaluate your asset allocation in light of your risk tolerance, and stay focused on your long-term plan and goals. Save your political beliefs for the polling place and letters to your elected representatives; don’t let them cloud your investment decisions.

Remember in November 2016, when some in the media were predicting disaster on Wall Street if Donald Trump was elected? Remember how that didn’t happen? Remind your clients of that, and encourage them to pay attention to the lessons of history and empirical, evidence-based financial science.

Our clients depend on us to be the calm, logical, informed voice that they need, whether they are being driven by irrational euphoria or irrational despair. We can’t let them down.

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