For years, Dave Simon has delivered the same message to investors: don’t mix politics with investing. History has shown time and again that elections rarely have the dramatic impact on the stock market that many people fear.
In this video, however, Dave makes an important distinction. While he still believes investors shouldn’t make emotional decisions based on election results, he wonders whether growing political polarization could eventually have a greater influence on the investment landscape than we’ve seen in the past.
Why Elections Alone Rarely Move the Market
Every election cycle brings predictions that a victory by one party or another will devastate the market. Yet history tells a different story.
Markets generally don’t crash because of election outcomes. Investors have time to evaluate proposed policies as they move through the legislative process, allowing markets to gradually price in potential changes long before they become law.
That’s why Dave continues to emphasize an important principle: making investment decisions based on political emotions is usually a costly mistake.
A Historic Shift in Political Stability
The bigger concern isn’t any single election.
Dave highlights data showing that from the 1960s through the 1990s, changes in political control happened relatively infrequently. Since the early 2000s, however, power has shifted back and forth much more often, reflecting a growing “throw the bums out” mindset among voters.
In Dave’s view, this level of political volatility is something investors should pay attention to, even if it doesn’t require immediate action.
Social Media and the Rise of Political Extremes
Dave believes social media has accelerated political tribalism, giving greater visibility to viewpoints that once sat on the political fringes.
Whether it’s democratic socialism on the left or nationalist movements on the right, ideas that were once considered extreme are becoming more mainstream. His point isn’t to endorse or criticize either side, but to recognize that these movements are real and growing.
Ignoring them, he argues, isn’t a sound strategy for understanding the future economic and political landscape.
The Economic Trend Behind the Frustration
One of the most compelling charts Dave shares compares worker compensation to corporate profits as a percentage of GDP.
For decades, the relationship between the two remained relatively stable. Around the turn of the century, however, corporate profits began rising while worker compensation declined as a share of economic output.
Dave believes this trend has helped fuel dissatisfaction across the political spectrum. Many Americans feel they are not benefiting from economic growth to the same degree as previous generations, which has increased support for more dramatic policy proposals from both the left and the right.
For investors, the key takeaway isn’t whether these movements are right or wrong. It’s understanding that they are influencing the political conversation in meaningful ways.
What Should Investors Do?
For now, Dave’s answer is simple: nothing.
He is not recommending that investors sell stocks, move to cash, or overhaul their portfolios. Instead, he believes investors should stay informed and watch long-term developments carefully.
If political and economic shifts become more significant in the years ahead, they could eventually influence how investment opportunities are evaluated. But at this point, there is no reason to abandon a disciplined investment strategy.
Why Dave Remains Optimistic About America
Despite acknowledging rising political tensions, Dave remains optimistic.
His confidence comes from history. Over nearly 250 years, America has endured wars, economic crises, political upheaval, and social division. Through it all, the country’s institutions, property rights, and economic system have proven remarkably resilient.
Dave believes the political center has historically held, and he expects it will again.
The Long-Term Investment Outlook
Dave also points to America’s continued economic dominance. Although the United States represents only about 4% of the world’s population, it generates more than a quarter of global GDP and remains home to most of the world’s largest companies.
He believes the U.S. is well-positioned to continue leading innovation, particularly in artificial intelligence, and sees little reason to doubt America’s long-term economic strength.
Final Thoughts
Dave’s core message hasn’t changed: don’t let politics drive your investment decisions.
What has changed is his recognition that growing political polarization deserves attention from long-term investors. While elections themselves rarely determine market outcomes, broader political and economic trends can shape the environment investors operate in over decades.
For now, the best approach remains the same: stay diversified, stay disciplined, and focus on the long term rather than the latest political headlines.
If you’d like help understanding how today’s economic and political trends fit into your retirement or investment plan, consider speaking with a trusted financial advisor who can help keep your strategy aligned with your long-term goals.
