In his latest newsletter to clients, portfolio manager Gary Greenbaum urged them to vote in the presidential election -- but not with their investments.
"Most of our clients say, 'What impact will the presidential election have on my investments?'" said Greenbaum, a fee-only certified financial planner and chartered financial analyst with Greenbaum and Orecchio in Old Tappan, N.J.
But if history is any guide, he has concluded, even this contentious and presumably close election won't have significant effects on the stock and bond markets in the long term. That's not to say that some individual stocks won't spike briefly once Bush or Kerry wins.
"It does matter, but you can't bet on it," said Greenbaum, who's been managing money for 21 years and whose firm has $170 million under management. "You've got to be correct six months in advance."
The noise and confusion Wall Street generates during election season usually enriches those who are selling investments, not those buying them, he said.
Some investors are nervous that John Kerry, if elected, will quickly try to undo Bush's big tax breaks for capital gains and dividends. However, that isn't a given, especially if Congress, as expected, remains dominated by Republicans.
"Kerry winning by itself is not as powerful as Kerry getting a mandate," said Lewis J. Altfest, president of L.J. Altfest & Co., which manages $250 million.
He and other portfolio managers interviewed believe that investors are better off creating a diversified portfolio and sticking with it, before and after elections.
"You start to get into market-timing," said Ron G. Heath, CFP, CFA, who runs Heath Financial Advisory, in Encinitas, Calif. He said that holding investments for the long term reduces trading and tax costs.