SPC Premium: It's the "Election Adventure" - Not the "Poseidon Adventure"
On this "morning after," these stocks are poised to win ...
For better or for worse (and probably both), I’m a product of the 1970s …
We’re talking about a decade in which:
Two separate (and terrifying) oil shocks – and a near-nuclear meltdown at Three Mile Island — had folks considering a future filled with shortages of all types.
A political scandal called Watergate profoundly eroded our trust in government.
An economic parasite called “stagflation” ground away at our finances, our job security and our growth.
And a global threat called the Cold War had us believing that nuclear war was actually possible … and had us considering what the aftermath would look like.
I was lucky: I grew up with two great parents, and two terrific younger sisters — which is probably why I’m an optimistic guy, albeit one who looks at the long haul.
But all this instability created a massive overhang of uncertainty — hell, actual doubt — which is why a lot of folks felt resigned to a bleak future, a “tomorrow” with declining living standards, civil unrest and perhaps a nuclear-oblivion ending.
All that skepticism and disillusionment infiltrated that era’s pop culture — especially movies. Network (1976) spotlighted media manipulation; The China Syndrome (1979) warned us of the dangers of nuclear power; Three Days of the Condor (1975) keyed on the CIA and government conspiracies (and is a personal favorite); All the President's Men (1976) chronicled Watergate, extolled the importance of new investigative journalists and inspired me to become a reporter; and One Flew Over the Cuckoo's Nest (1975), which eviscerated the U.S. mental-health system.
Not surprisingly, the 1970s were also the decade of the “Disaster Flick” — including Airport (1970), Earthquake (1974), The Towering Inferno (1974) and … The Poseidon Adventure (1972).
For folks who’ve never seen it, that last flick is about an ocean liner that’s capsized by a rogue wave that kills the crew and virtually all the passengers, leaving a small band of survivors to fight their way to safety.
It’s a dour-and-deadly storyline, which is why it’s always amazed me that the movie’s theme song is the Maureen McGovern hit “The Morning After” — whose lyrics are downright hopeful.
“There’s got to be a morning after … if we can hold on through the night. We have a chance to find the sunshine … let’s keep on looking for the light.”
This was an upbeat outgrowth of our 1970s saga: The song resonated with audiences and in 1972 it won the Academy Award for Best Original Song.
I’m hitting the whole 1970s storyline hard here for a reason.
It’s relevant.
Financial historian Mark Higgins recently told us that the economic streetscape of today reminds him very much of the late 1960s and early 1970s (more on that in my post-Federal Reserve analysis later this week).
More to the point: You folks are reading today’s issue of Stock Picker’s Corner (SPC) the “morning after” one of the most-polarizing elections in American history — indeed, one that echoes the divisive White House referendums of 1860 (a walkup to the U.S. Civil War) and 1968 (against a backdrop of violent protests relate to the Civil Rights movement and the Vietnam War).
And while it’s easy to question whether there would be a new dawn after the stormy campaign season, America will make it through.
It always does.
So, as an investor — like the Poseidon survivors — you need to keep moving.
There will be a “morning after.” And to survive and thrive you need to focus on THAT.
You see … there’s the election.
And there’s “what comes next.”
As we all know, the stock market is a “discounting mechanism” — one that peers far into the future.
So if you want to be a Wealth Builder … and not a Wealth Killer … it’s the “what comes next” that matters.
Here on the “morning after,” I’m going to do my part to do my best to ease your fears … and then give you some “what comes next” moves.
I don’t want your Election Adventure to turn into the Poseidon Adventure.
And I don’t want you to merely “survive.”
I want you to win.
THE “POST-ELECTION” STRATEGY
Here at SPC, we’re not politically focused.
We’re investment focused.
We’re Wealth Builder focused.
We’re reader-focused. On you.
That said, I acknowledge that we’ll have to navigate angst, recriminations, political maneuvering and who knows what else — a fusillade of political moves – which is to tell you folks to expect the kind of whipsawing volatility we see during periods of fear-stoking uncertainty.
But look past it, Carson Group Chief Market Strategist Ryan Detrick said after finishing a recent financial study.
Detrick went back decades — and looked at how stocks fared during Republican and Democratic presidencies.
His conclusion lines up with what we tell you folks: Play the long game.
Go back to 1953 — the year Republican President Dwight D. Eisenhower took office — and invest $1,000 in the broad market.
What he found:
If you invested only during Republican administrations (cashing out when Democrats took over the White House), you’d have a bit less than $30,000 today.
If you did the same thing – albeit with a Democratic “flavor” – you’d have about $60,000.
But if you put that grand in stocks – and kept it there – you’d have $1.7 million.
The fact is that U.S. stocks have risen during 17 of the 20 four-year presidencies since Ike took over the Oval Office.
“Do not let politics mix with your investments,” Detrick told CNBC in a recent interview. “A lot of people didn’t like President [Barack] Obama. A lot of people didn’t like President [Donald] Trump. A lot of people don’t like President [Joe] Biden. The stock market did just fine under all three of them.”
More important than the party of the commander in chief is the makeup of Congress: A “divided” Congress — where no single party controls both houses – is best.
According to CNBC, from 1951 through 2013, the S&P 500 posted average annual returns of:
6.7% when the Democrats owned both.
11% when the Republicans were in control.
And 14.5% when they were split.
The fact is, U.S. stocks have an upward bias for long-term investors.
If you know that and act on it, you can put yourself on the path to building wealth.
And if you can find the best storylines, you can find the best stocks.
We’ll do both here next …