People are passionate about politics. With cable news and social media we can follow political developments whenever we wish. But doing so can be overwhelming and exhausting. It can also be damaging to your portfolio,

With each new administration I hear analysts and strategists predicting which stocks will benefit the most and which will be hurt. That approach doesn’t always work. The worst traders are those that buy and sell based primarily on politics and what seem to be their likely implications.

When Trump was elected to his first term, some saw that as a buying opportunity for energy stocks and a selling opportunity for solar. Steel stocks would benefit from tariffs. But during his first four years the opposite occurred. The Invesco Solar ETF (TAN) jumped 550 percent while Market Vectors Steel ETF (SLX) only rose 15 percent. Energy stocks trailed.

After Biden was elected I wrote to ignore the recommendations for “Biden” stocks. Thank goodness. Most analysts said solar and clean energy stocks would lead thanks to the poorly named Inflation Reduction Act. Not so fast. Invesco Solar plunged 70 percent during Biden’s term. Meanwhile, iShares Oil & Gas Exploration & Production ETF (IEO) jumped 135 percent!

When Trump was re-elected last November we were told that small-cap and energy exploration stocks (drill, baby drill) would do best. Initially they rallied. But since the inauguration iShares Russell 2000 (IWM) and iShares Oil & Gas Exploration & Production (IEO) have both lost 6 percent.

Still, policies matter. If corporate taxes increase then profits would suffer and there would be less to pay as dividends to stockholders. It would make for a difficult year-over-year comparisons should that happen. Tariffs matter too. Trade wars hurt all involved economies.

Politics aside, stocks advance over the long run. After every bear market there is a new high … eventually. That’s why most investors should own low-cost broad-based index funds. Don’t be swayed by attention-grabbing headlines or scary indicators like the “Death Cross.”

There are two elements to stock prices. Earnings and the value investors put on future earnings discounted by interest rates. Analysts expect S&P 500 earnings growth of 11 percent this year, which puts the market’s P/E ratio at 23 times earnings. That’s no bargain. In that kind of market dividends matter. Better still are companies that pay and raise their dividend each year. That points to energy, utilities, healthcare and banking. Add to that some high-yielding preferreds and investment grade corporate bonds and you have a solid portfolio that is well positioned for any political environment.

David Vomund is an Incline Village-based Independent Investment Advisor. Information is found at http://www.VomundInvestments.com or by calling 775-832-8555. Clients hold the positions

mentioned in this article. Past performance does not guarantee future results. Consult your financial advisor before purchasing any security.