How the Govt. Shutdown Affects Investments...

Are you exhausted? Earny is.

This week’s edition delves into the hot topic on the minds of investors: the government shutdown. We don’t like talking politics, but we had questions about the impact that the shutdown will have and thought the topic was important enough to answer. In fact, we sourced this week’s answer from notable contributors to TheStreet and TheStreet Pro. This week’s Earny Asks will tell you what you need to know about the shutdown.

Kate’s taking a few weeks off to study for her CFP. When she comes back in November, she’ll be ready to go with new information to help us all become better investors.

✌  Jason Meshnick

Earny Asks: How Will the Government Shutdown Affect My Investments?

In this edition, we discuss:

• How long will the government remain shut down?
• What is the economic impact?
• How will your investments perform?

Let’s not sugarcoat this. A government shutdown is a disaster.

Whether you’re one of those people who believe that the worst nine words in the English language are Ronald Reagan's famous line, “I’m from the government and I’m here to help”; or you’re one of those people who believe that the worst 18 words in the English language are “the worst nine words in the English language are ‘I’m from the government and I’m here to help,’” people will suffer. And that’s not good.

I’ve been trying to understand how this will affect us and wanted to share what contributors on TheStreet and TheStreet Pro are saying.

Earny Asks: How Will the Government Shutdown Affect Investments?

Since this is an investing newsletter, let’s get the important part out of the way. How will your investments do during a shutdown and should you continue to invest?

Let's start by looking back at history. TheStreet's Noah Weidner shared a study from Vanguard showing that during the 21 previous shutdowns since 1976, the S&P 500 rose 11 times and fell 9 times. 

The gain in 2018 was more than 9%, but that followed a decline of nearly 20%, so the market was ready to bounce. Currently, the stock market is at all-time highs and stocks are as expensive today as they were before the dot-com bust. 

Buyer beware — but not because of the shutdown.

Vanguard

Peter Tchir, a veteran trader and contributor to TheStreet Pro, suggests that stocks could be under pressure if the shutdown becomes lengthy and that bonds will be a good place to hang out.

In this week’s Podcast, Louis Llanes said the shutdown won’t last long but will result in additional market volatility. It’ll also hurt home sales, and both Louis and Chris Versace are trying to sell their houses. (Subscribe to TheStreet’s Stocks and Markets Podcast on YouTube or on Apple Podcasts.)

Ed Ponsi sees opportunities that he writes about in How Could the Government Shutdown Affect Your Investments? He details, with charts, the impact on stocks, bonds, gold and the dollar.

So, yeah. Stay the course with your current investment strategy. If the market falls, it won't be just because of the shutdown. But it could continue to rally, too! This is a time to be properly diversified to manage the increased volatility that will certainly come in the months ahead.

How the shutdown will affect more than just your investments...

Earny is exhausted. Are you?

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