How to Invest in This Fraught Election Year

The first debate is over, and President Biden’s faltering performance prompted much hand-wringing among Democrats. How likely is it that former President Donald J. Trump will win the November election?

As a citizen and as a voter, I care about this question. But as an investor, I’m indifferent — or at least I’m trying to be.

Fundamentally, the markets don’t care who wins. Stocks rose early Friday after a favorable inflation report only to give up a little ground later, while the odds of another Democrat replacing Mr. Biden jumped on PredictIt, an election prediction market. Even with this turmoil, financial markets seem utterly unruffled by political developments.

Momentous as this election may be, stocks did well under President Trump and they are doing well under President Biden — not necessarily because of any of their policies.

The harsh truth is that the market is amoral and largely apolitical. Most people have been better off financially if they disregarded politics entirely.

Staying in the Market

Consider three hypothetical investors with different views about politics and finance, in a study by Jeff DeMaso, editor of The Independent Vanguard Adviser, a newsletter focused on Vanguard funds.