Investing in America, not Politics: The Strength of Compounding Returns

November 06, 2023

Imagine with me two boys having a who-has-the-biggest bicep contest in the front yard with all their neighborhood friends.

Each one trying to out-flex the other.

One of them wins. And it’s obvious.

The winner pounds his chest like a gorilla, and the loser hangs his head in defeat.

The friends of the winner get a confidence boost too impressed with their muscular leader, and the friends of the loser quietly make excuses and strategize about how to win the match next year.

It feels good when “your side” clearly wins.

Imagine then just as the stronger boy gives a final flex, a limousine pulls up and out steps The Rock. Dwayne Johnson looks at the two boys raises one eyebrow, flexes both biceps, and then smirks and the limo drives off.

The entire neighborhood stands awed, as the difference between the two boys is miniscule in comparison to the thew and brawn of the wrester turned actor.

Too many investors are sitting around basing their investment portfolios on the strength of their chosen politician and ignoring the Rock-like power of compounding returns when staying invested over the long-term.

The problem is that they are focusing on the wrong thing.

Past performance is no guarantee of the future, but the past has shown that investing under Eisenhower (R), Kennedy (D), Johnson (D), Nixon (R), Ford (R), Carter (D), Reagan (R), HW Bush (R), Clinton (D), W Bush (R), Obama (D), Trump (R), and Biden (D) significantly outperformed only investing under only one party.1

This might be worth remembering as we enter the next year of election fervor.

Investing in America through and in its ups and downs has far exceeded partisan investing.

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  1. Chart from Bespoke Investment Group on Twitter 11:30am, September 6, 2023: