After

  By Guest Blogger Doug Rowat

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I had the opportunity to have a guided tour of the 9/11 Memorial & Museum this past summer and the tour was, to say the least, sobering.

As our guide pointed out, never had so many people across the world collectively witnessed so much tragedy and death simultaneously, either from the initial impact of the planes, the collapse of the towers themselves or the individuals hurling themselves to the ground to escape the heat and smoke.

More than 3,500 flights across the US were grounded within hours, also a historic first. This video on display at the Museum was nothing short of spectacular:

And as far as investors were concerned, downtown Manhattan became a war zone and the NYSE remained closed (along with all US financial markets) for four straight days, the longest stretch since 1933.

It was also assumed at the time that this was simply the first salvo it what would be many more attacks on the US. You may have been afraid during the financial crisis or during Covid, but perhaps no single event in world history, at least over the short term, caused more widespread, and acute, fear and uncertainty than 9/11.

So here we are just days after the most important election in US history. At least that’s what both the Republicans and the Democrats told us. An election whose results would destroy the country (if you voted the wrong way). It was an election, in other words, that maximized fear and apparent consequence to levels even greater than during 9/11.

However, it may turn out that the election was only monumental in the moment. We tend to think that what happens in our time, in our moment here on Earth, is more significant than anything else that’s come before. But this is just vanity. While you were consumed with this week’s election results, you may have overlooked Abraham Lincoln’s presidential win in 1860, which was less than five weeks before the Civil War broke out, a war that lasted four years, bankrupted large parts of the US and claimed more than 600,000 lives at a time when the US population was only about 31 million.

And when it comes to investing, park your political biases at the door. Whether you like the US election results or not, this is the hand that investors have been dealt. You might have thought that the world was ending when Trump became president in 2016, but exiting the market then because of his policies and vision for America would have been a terrible mistake. The same with Biden’s policies and vision when he won in 2020. In fact, it would have been an even bigger mistake with Biden’s presidency as it turned out:

US equity-market performance under Trump and Biden

Source: Bloomberg. Time periods are from election dates. Trump: Nov 8, 2016 to Nov 3, 2020. Biden: Nov 3, 2020 to Nov 5, 2024.

The below chart, which shows S&P 500 returns based on the US president in power, further illustrates the danger of letting your political preferences interfere with your investing. Be clear eyed: will the US president be the bigger determinant of market direction or will, say, central bank interest-rate policy, global demand and corporate profit growth, which are factors that exist during any president’s tenure, carry more weight?

US politics: don’t play favourites when it comes to your investments

Source: National Bank Investments

Finally, if you’d bought the S&P 500 on September 10, 2001 your investment would have appreciated almost 740% on a total-return basis, or almost 10% annually.

Not a bad rate of return for having the courage to stay invested at a moment when our collective fear and anxiety was perhaps the most elevated in human history.

Until maybe now that is.

Doug Rowat, FCSI® is Portfolio Manager with Turner Investments and Senior Investment Advisor, Private Client Group, Raymond James Ltd.

Source: https://www.greaterfool.ca/2024/11/09/after/