Date: July 2, 2024

Election Year Investing Strategies

While watching last week’s debate, I thought about the impact it could have on the market.  Investing during an election year can be daunting, especially with the added uncertainty and volatility that political events can bring to the financial markets. However, with the right strategies and a clear understanding of the potential impacts, you can make informed decisions to safeguard and potentially grow your investments. In this blog, we’ll explore effective investment strategies to navigate the market during an election year.

Election Year Investing Strategies

Understanding Election Year Market Volatility

Election years often bring heightened volatility to the stock market. Investors react to the uncertainty surrounding potential changes in government policies and their impact on the economy. Here’s what you need to know:

  • Political Uncertainty: Elections can lead to unpredictable market reactions. Investors may become cautious, leading to fluctuations in stock prices. The stock market hates uncertainty.
  • Policy Changes: Different candidates propose various policies that can impact industries differently. This can cause shifts in market dynamics.
  • Economic Indicators: Key economic indicators such as GDP growth, unemployment rates, and inflation can be influenced by election outcomes, affecting investor sentiment.

Key Investment Strategies for Election Years

To navigate the market during an election year, consider these investment strategies:

Diversify Your Portfolio

Diversification is a fundamental investment strategy, especially during uncertain times like an election year. Spread your investments across various asset classes to minimize risk.

  • Stocks: Invest in a mix of large-cap, mid-cap, and small-cap stocks.
  • Bonds: Consider adding government and corporate bonds for stability.
  • Real Estate: Real estate investments can provide a hedge against market volatility.
  • Commodities: Gold and other commodities often perform well during periods of uncertainty.
  • Private Credit: Private credit offers excellent risk adjusted returns in the current environment.

As a registered investment advisor in Gilbert, Arizona, we specialize in helping individuals construct diversified portfolios that are tailored to the investor’s goals and risk tolerance.

Focus on Long-Term Investments

While it’s tempting to react to short-term market movements, maintaining a long-term perspective can help you stay focused on your financial goals.

  • Stay Invested: Avoid the urge to sell off your investments during market dips.
  • Rebalance: Regularly review and adjust your portfolio to maintain your desired asset allocation.
  • Stay Calm: Remember that markets have historically recovered from political and economic disruptions.

Invest in Defensive Stocks

Defensive stocks are companies that provide essential goods and services, making them more resilient during economic downturns. These stocks can be a safe haven during volatile times. We have had a recent run in growth stocks while these defensive, value stocks have lagged.

  • Consumer Staples: Companies that produce essential products like food, beverages, and household goods.
  • Healthcare: Healthcare companies often remain stable as people continue to need medical care regardless of economic conditions.
  • Utilities: Utility companies provide essential services such as water, electricity, and gas, making them less susceptible to market swings.

Managing Investment Risk During an Election Year

Managing risk is crucial when investing during an election year. Here are some tips to help you mitigate risk:

Keep Cash Reserves

Maintaining a portion of your portfolio in cash or cash equivalents can provide a safety net during periods of extreme volatility.

  • Liquidity: Cash reserves offer liquidity, allowing you to take advantage of investment opportunities when prices dip.
  • Stability: Having cash on hand can help you avoid being forced to sell investments at a loss during market downturns.
  • Income: With today’s high interest rates, cash investments can pay upwards of 5% annual interest.

Use Dollar-Cost Averaging

Dollar-cost averaging involves investing a fixed amount of money at regular intervals, regardless of market conditions. This strategy can reduce the impact of market volatility on your investments.

  • Consistency: Regular investments help smooth out the effects of market fluctuations.
  • Lower Risk: By spreading your investments over time, you reduce the risk of investing a large sum at an inopportune moment.

Monitor Economic Indicators

Stay informed about key economic indicators that can signal potential market trends during an election year.

  • GDP Growth: Track the overall economic growth to gauge market health.
  • Unemployment Rates: Changes in employment levels can impact consumer spending and corporate profits.
  • Inflation Rates: Monitor inflation to understand its impact on purchasing power and interest rates.

Sector-Specific Investing During an Election Year

Different sectors can react differently to political changes. Here’s a look at some sectors to consider during an election year:


The technology sector often remains strong due to constant innovation and consumer demand for tech products and services.

  • Innovation: Tech companies continually innovate, driving growth even during uncertain times.
  • Global Reach: Many tech companies operate globally, providing diversification beyond domestic political issues.

Renewable Energy

Renewable energy companies can benefit from political support for green initiatives, making this sector worth considering.

  • Government Policies: Political support for renewable energy can lead to growth opportunities.
  • Sustainability: Increasing focus on sustainability can drive long-term growth in this sector.

Talk to your advisor at Watts Gwilliam about our infrastructure investment opportunities.

Financial Services

The financial sector can be volatile during election years but offers opportunities for savvy investors.

  • Interest Rates: Changes in government policies can impact interest rates, affecting financial services companies.
  • Regulation: Keep an eye on potential regulatory changes that could impact the sector.


Investing during an election year can be challenging, but you can navigate the market effectively with the right strategies. Focus on diversification, long-term investments, and defensive stocks to minimize risk. Keep cash reserves, use dollar-cost averaging, and monitor economic indicators to stay informed and prepared. Consider sector-specific opportunities and stay calm amid market volatility. By implementing these smart investment strategies, you can make informed decisions and protect your financial future during an election year.

Schedule a consultation with an advisor at Watts Gwilliam & Company, an investment advisor in Gilbert, AZ to discuss your investment goals. Our experienced team can help you navigate the complexities of investing during an election year and beyond.



David Watts

Dave is one of the firm’s founders. He helps business owners, professional athletes, and other high-net worth clients develop and implement financial plans and strategies. He also specializes in helping those with single-stock positions to diversify and manage their financial lives. Other areas of specialty are wealth transfer plans for concentrated stockholders and business owners; tax minimization strategies for those with employee stock options; cash flow management; and risk management planning.