Worst President Ever

Who will be the better President, or who will be worse? Historians also argue who was the worst? Perhaps Warren G. Harding for the scandals that plagued his short term or Woodrow Wilson who lead us into WWI. However, James Buchanan is most often saddled with the title of “worst US President.” When a fork in the road appeared, he typically took the wrong path. Buchanan took little interest in battling the recession that struck before the Civil War. And his attitudes and blunders about slavery helped divide the country and his party.

The American economy was robust in the early 1850’s. Twenty years of expansion had been fed by Manifest Destiny, the discovery of gold and silver, and westward expansion by railroads, settlers and commerce. Manufacturing boomed from strong overseas demand. And the number of banks doubled from 1850 to 1857.

But the economy strained and the Panic of ’57 ensued. US farming profits plunged from bumper crops and overseas competition. Investors worried about speculative railroad and land loans. US gold reserves declined $20 million from trade imbalances and withdrawals. Ohio Life & Trust’s bankruptcy signaled trouble. Credit collapsed, building and railroad construction froze, and unemployment skyrocketed. (Sound familiar… the cycle of bubbles?).

The President said the government would do nothing…” the speculators in land and slaves deserved their gambler’s fate.” The government would continue to pay its obligations and complete existing projects, but little else. He did take anemic action with the Treasury. The size of coins was halved to reduce the silver and gold.

Buchanan also took little action to avert civil war and head off secession. He supported slavery and the Dred Scott decision which denied citizenship to African Americans. He addressed territorial slavery in his inaugural speech as “happily a matter of but little practical importance.” He backed the admittance of Kansas with its pro-slavery constitution and further divided his party ensuring Lincoln’s victory. And he took no action as seven states seceded on his watch.

He and Lincoln rode together to the new President’s inauguration. Buchanan said “If you’re as happy entering the presidency as I am leaving it, then you are a very happy man.” Who would have criticized the gent with the stovepipe hat who may have thought “Don’t let the carriage door hit you on the way out.”

We were taught two “don’ts” – don’t talk politics and don’t throw stones. However, the elephant in the living room deserves some attention. Some are voting for a candidate, and others are voting against the opponent. What and can they deliver? How will campaign promises differ from his or her policy decisions after the election? How will the markets react?

I’m no political expert. I join others pondering is the process flawed? How to encourage the best candidates to run? What to do with the shift in US values and beliefs? However, two things (1) not every position has supporting data and not every point will be swayed by the facts, and (2) it’s important to control what we do control.

Historically, election outcomes and market performance have little statistical relationship. However, in past elections, the S&P has seen more positive performance than negative. There’s less uncertainty – somebody won vs who won. Goldman Sachs analyzed the S&P index for 12 months following presidential elections since 1988. Average return was about 11% with the worst in 2008; there’s a typical post-election bounce, regardless of the winning party. First Trust studied 22 election years since 1928 and 82% (or 22 years) were positive returns. And Goldman also concluded that despite campaign rhetoric, longstanding checks and balances tend to mute grandiose campaign promises.

There are other important questions relevant to your financial health, and less likely to get you into a brawl. What’s important about money to me? What are my goals with my finances and my life? What obstacles do I face? How can I be more involved in the process?

We enter the fourth quarter. It’s crunch time and time to buckle up for the opportunity and challenges ahead. Here are some calendar items for you and your advisors:

  • Maximize deductible retirement and HSA contributions for 2016.
  • Adjust payroll/pension tax withholdings to avoid underpayment penalties.
  • Accelerate earnings to 2016 (or defer to 2017).
  • Make required minimum distributions from retirement accounts.
  • Execute year-end charitable giving and capital gains minimization strategies.
  • Medicare open enrollment runs until 12/7 (Affordable Care Act (the Exchange) runs later 11/1 to 1/31/17).
  • Final quarterly estimated taxes are due 1/17/17.
  • Review and update estate plans and beneficiary designations.

And vote on 11/8. Good luck.

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