by Taylor J. Kovar, CEO – Kovar Capital
Hi Taylor – I read a lot of “market dips as investors weigh impeachment” headlines, and I’m wondering how much this mess might affect my retirement account. Should I be concerned? – Randy
Hey Randy – This is a great question because the answer is much more involved than those headlines. News sources want you to click on their articles, so the tagline will always be a bit over the top even when the content of the article is pretty unassuming.
From an investment standpoint, we can look at impeachment in a few different ways. First, it’s a big distraction from the other things that actually do have a direct impact on the economy. The trade war with China has much more relevance to all of our retirement accounts than an impeachment inquiry, but we won’t hear as much talk of that while news outlets focus on the latest story. In the meantime, you’ll see much greater rises and falls within the market when trade talks resume or get called off, even if that doesn’t dominate the headlines.
Naturally, markets will move around based on investors’ assessment of whether or not the president will remain in office. Many industries and corporations have benefitted from this administration’s economic policies; any fear that these proceedings will impede the president’s ability to govern could have an impact on those market shares. I don’t think every sector will react in the same way, but I do expect to see more down days than up as the process unfolds.
Finally, we’ll have to see how long the proceedings drag on. As long as we’re stuck in political gridlock, it should come as no surprise when the market stumbles a little. At the same time, you’ll see examples of how resilient the economy is, as we’ll have days where the news cycle is absolutely bananas and yet the Dow goes up 100 points. While the news ticker might talk about impeachment 24/7, the stock market will continue to react to other stories and events that might not make everyone’s radars.
In the long run, your retirement account is fine. It might seem as though this event drives the country toward undue economic hardship, but much of that could be the market receding as it naturally would. This divisiveness isn’t fun for anyone, but no one should be emptying their IRAs for fear of a full economic collapse. Buckle in and expect some bumps in the ride, but contribute to your retirement as you normally would and trust the markets to persevere. Thanks for the question, Randy!
