On my return from a few days off-grid, I was assaulted by reams of research on the possible impact of the American election on our future. How will a Biden administration impact global growth? Will a Trump win spur financial markets on? Speculation clothed as research or expert opinion claim to answer these questions.
The truth is that we don’t know. Even if we knew exactly which policies the next American administration would adopt, we do not know how it will impact our wealth. There are too many other variables involved in how the future will evolve and there is no direct link between election results and the economy or the outcome of financial markets.
Understanding the nuances of the American election (or the lack of nuance in the case of Trump) may make an expert sound intelligent, but it doesn’t give them an advantage when it comes to managing money.
Of course, the American election is important. It will set the global direction for the next four years. However, there is simply not enough evidence that getting the result right will have any economic benefit to the forecaster. Somehow though, we cannot help ourselves obsessing over forecasting the future; as though a correct results prediction means we can now accurately predict the financial future and so plan specifically towards that. We can’t. But we can take steps to manage our finances in the face of uncertainty. It feels more uncomfortable – acknowledging uncertainty – but it is more helpful for financial planning than betting on an outcome.
Seeing the election and the speculation in this light removes the drama and fear. It is then just part of the unfolding of our unpredictable future for which your financial planning should already account.
//23 October 2020