As a registered U.S. citizen, every two years you have a moral responsibility to vote for politicians.
We can’t predict the outcomes of election results, but we can provide some insight into how the securities markets will react to various election outcomes. This information can provide some perspective that will help you determine a strategy for the investment of your assets in 2023.
What is more important? The current economic environment (recession, inflation, supply chain issues) or the outcomes of the midterm elections and their impact on the future direction of the country.
The questions that investors should be asking themselves include:
- Is the stock market a leading economic indicator?
- What else does history tell us about the impact of elections on the securities markets?
- How can midterm elections impact the future performance of the markets?
- How will global investment management protect my financial interests?
- How will diversification impact my financial results?
- Why is global management the better way to invest?
- Why do so many families invest in global portfolios?
- Why do families use a Swiss firm for global investing?
LFA, based in Switzerland, can help you develop and implement a global investment strategy. Our specialty is working with Americans like you.
Experienced Swiss wealth management firms like LFA know there are patterns that repeat themselves during these economic and political cycles. And these patterns help us develop investment strategies that can work in the future.
Is the stock market a leading economic indicator?
The results of the House of Representatives and U.S. Senate races may change the control of Congress in the 2022 midterm elections.
How is the stock market affected by the elections? Will this impact the future performance of the securities markets?
Many investment professionals believe the stock market is a leading economic indicator. Its current pricing is based on what it thinks will happen over the next six months.
If this belief is correct, then the stock market has already priced the outcomes of the elections into the pricing of individual securities.
The greater impact in the fourth quarter of 2022 and the beginning of 2023 may be based on inflation (highest in 40 years) and the current recession.
What else does history tell us about the impact of elections on the securities markets?
If there is anything the stock market likes in Washington D.C. it is gridlock. That is, one party has the presidency, and the other party has majorities in both houses of Congress.
In general, the two parties have real problems passing new legislation due to gridlock because the politicians cancel each other out. This creates a more stable environment for businesses and more predictable outcomes for the analysts who follow their stocks.
On the other hand, if one party controls both the presidency and congress, it is much easier for them to pass bills and budgets that suit their constituencies and donors. This is what we have had since November 2020. The courts are the only recourse for the party that is not in power.
Perhaps the riskiest scenario is when the extremists in one party are in a position to control or influence the decisions of the party that controls the presidency and Congress.
Will the future be like the past? No one has a crystal ball that accurately predicts the future. It is better to be prepared for multiple eventualities. Talk to the professionals at LFA for more information.
How can midterm elections impact the future performance of the markets?
How strong a message will the American public decide to send to the mayors, governors, congressmen, senators, and president that run the U.S.?
Will one party prevail over another? Will the voters send a decisive message to both parties, or will the message be closer to one that is split down the middle – for example, 51% to 49%?
Will more moderate voices prevail, or will the extremists in both parties have the loudest voices?
How will global investment management protect my financial interests?
The simple answer to this question is that you could use global management to move a significant portion of your net worth outside the United States. You have reduced your exposure to U.S stocks and the U.S. dollar.
You will utilize a global investment strategy to invest in the best companies in the world – not limited to any one country.
You will want to select a country that has a stable government and long history of providing top-quality financial advice and services to Americans.
Look no further than Switzerland and its stability to global investors.
How will diversification impact my financial results?
You already have a certain level of diversification when you diversify between:
- Stocks, bonds, and cash equivalents.
- Sectors of the economy: Energy, retail, technology, Utilities, etc.
- Growth and value stocks.
Then it makes sense to invest in domestic and international securities. This creates the opportunity to invest in the best companies in the world.
Global investing may be based on where businesses are headquartered. On the other hand, a U.S. company may derive most of its earnings outside the U.S. and a European company may derive most of its earnings from inside the U.S.
Which company is domestic and which one is foreign?
Why is global management a better way to invest?
It’s safe to say that a healthy economy is more important than midterm election results. But when the U.S. economy is walking on eggshells, it can be in your best interest to look outside the country for safer investment opportunities. Because a country’s economic wellness varies based on political stability, policies, regulations, and actions.
It may be time to diversify your holdings into Swiss francs and global investments.
Switzerland has been hailed as one of the wealthiest countries in the world for good reason. The country of the Alps and Swiss francs boasts a disciplined central bank, thriving economy, balanced budget, and political stability. These characteristics can provide a stable environment for all or a portion of your assets.
High-net-worth individuals and their families use global investment strategies to diversify their investments and reduce their risk.
You can feel safe knowing that part or all of your net worth is managed by a Swiss team who can diversify your assets into Swiss francs and a global investment portfolio.
Conclusions
Talk to our team at LFA about the global strategies you can use to diversify your investments and reduce your risk.
You may drive a German car and wear a Swiss watch. Your lifestyle is based on buying the best products in the world. Why shouldn’t your investment portfolio be based on the same premise? Invest in the best companies in the world instead of limiting yourself to one country.
LFA can help! We are a Swiss-based firm that works for Americans. To learn more, please contact LFA to schedule an introductory call.
