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‘Vote with your ballot, not your life savings’: This veteran stock investor is sticking to his strategy no matter who wins the 2020 presidential election

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This is the 14th U.S. presidential election in which I’ve been eligible to vote. In the middle of a pandemic, it’s certainly different from the first 13. But one way it’s similar is that people always ask me if they should change their investment strategy depending on whether the Democrats or Republicans win. My quick answer is: Vote with your ballot, not your life savings. 

I’m not changing my investment strategy based on the presidential election outcome. That’s one of the great perks about being a long-term investor who thinks in decades and not days.

How did I come to this conclusion? It all starts with the data. The firm I co-founded, Dimensional Fund Advisors, looked at the last 95 years of stock returns (all the way back to President Calvin Coolidge). The data show that capturing the long-term returns of the capital markets has not depended on which party controls the White House.

Now I am not saying Coolidge, Hoover, Roosevelt, Truman, Eisenhower, Kennedy, Johnson, Nixon, Ford, Carter, Reagan, Bush, Clinton, Bush II, Obama, and Trump didn’t each impact the economy and markets in their own ways. Historians will argue about how and how much. But when we ran the data, we couldn’t find evidence that would point to an investment choice you should make based on which party wins. I like to make decisions based on what the data show. There’s nothing in the data compelling enough to cause you to make changes in your investment portfolio based on the outcome of elections.

This makes sense when I think about it. A president doesn’t sit in the Oval Office and run the economy. Four to eight years is a short period of time when it comes to investing. What really counts long-term is American ingenuity — products and services that solve problems. Over decades, it’s American innovation that succeeds, no matter what politicians do. 

That sounds great to me. The year 2020 has had too much stress for most folks. I’m glad people don’t have to make investment decisions based on who wins the presidency. Instead, I want people to have an investment philosophy they can stick with. If they focus on controlling what they can control, and taking the right amount of risk, they can make it through the tough times, and capture the rewards of the good ones.

In times of uncertainty, it’s important to remember that markets deal really well with new information. Markets are where buyers and sellers come together to voluntarily transact in real time. So they offer continuity in times of flux.

I think about investing as supporting the people and companies that are trying to improve our lives — by solving problems, improving efficiency, looking at old ideas in new ways. I don’t know which company is going to be the next big thing. That’s why I encourage everyone to own a broadly diversified portfolio. I also want people to talk to a financial adviser who can help them understand their goals and their level of risk to give them the best chance of winning, whatever winning means to them. I want them to remember that the U.S. market isn’t a reflection of who’s president, but of the ingenuity of the American people.

When I look at that 95 years of data, I conclude that for the most part, the sooner I’d put money into the market and left it there, the better off I’d be today. Imagine if you could have invested during the Coolidge administration — right before the Great Depression — and then left your money in the market until today. Despite lots of ups and downs, I’m pretty sure you would be happy with those returns. (One dollar would have turned into about $4,000.) That’s the power of the long-term investor who thinks in decades, not days. And that’s how I’m going to invest going forward — no matter who the president is. 

David Booth is founder and executive chairman of Dimensional Fund Advisors and a trustee of the University of Chicago, whose Booth School of Business is named after him.

More: The moment of truth for stock-market investors? Election Day looms and the most crucial stretch of 2020 awaits

Also read: The stock market’s ‘presidential predictor’ is forecasting a Biden victory



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‘I could live on my Social Security and still save money’: This 66-year-old left Chicago for ‘calming’ Costa Rica — where he now plans to live indefinitely

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Editor’s note: This article was first published in September 2019.

A school break changed 66-year-old Martin Farber’s life forever.

In 2007, his daughter — who at the time was attending Illinois State University — decided she wanted to spend a college holiday volunteering in Costa Rica and staying with a local family, he explains. She came home raving about the experience, so, in 2008, Farber — who at the time was living in Evanston, Ill., just outside Chicago, and selling cars — took his first trip there.

“It was a big surprise to me — bumpy roads, dogs barking in the streets,” he says. “I wasn’t enamored at first.”

But as his daughter began traveling there more and eventually moved there for a year, he took additional trips to Costa Rica. It quickly grew on him — in particular, the people. “The Costa Rican people are warm, open and friendly. I felt less invisible in a strange country in a strange town where I didn’t speak the language than I did in Evanston.”

And the more time he spent there, the more it impacted him: “On one of my trips there, I thought: My daughter’s life makes more sense than mine,” he says. “There was nothing wrong with my life, but I felt that my life was out of context with who I’d become. … I would have bills and make money to pay them, but that had ceased to be satisfying,” he recalls. “I knew I needed to change my life — there was no more joy in what I was doing.”

What’s more, when he’d return from his Costa Rica trips, people noticed. “I would come back, and my friends and therapist would say: You seem better after you go,” he says with a laugh.

A view from the hot springs near Martin Farber’s home in Costa Rica.


Martin Farber

So in 2014, he packed up and moved to Orosi — a picturesque, lush small town with waterfalls and hot springs a little over an hour’s drive from San Jose — promising himself he’d stay for two years. It’s been five, and he now plans to stay in Costa Rica indefinitely. (Though Farber notes that, to him, “it’s not a retirement; it’s a chance to lead a new and different life.”)

Here’s what his life is like, from costs to health care to residency to everyday life:

The cost: While many expats spend way more living in Costa Rica, Farber says: “I could live on my Social Security and still save money.” He says “a person can live on $1,200 per month, two people on $2,000.” The key, he says, is to live more like he does and as the Costa Ricans do — in a modest home, eating local food and purchasing local goods.

Indeed, Farber himself spends just $300 a month for rent (he rents a home from a friend who moved recently and gave him a good deal), roughly $225 a month on groceries and just $50 a month total on water and electricity (the temperate climate in Orosi means you rarely need heat or air conditioning). The veteran Volkswagen
VOW,
+0.96%

 
VLKAF,
+0.98%

salesman saves money by not owning a car (those over 65 ride municipal buses for free), which can be a significant expense in Costa Rica; for his cellphone, “I pay as I go … roughly $10 may last me a couple weeks or more,” he says, adding that “many people handle there their cellphones this way. You can get them recharged anywhere.”

His major expense is travel: He goes back to the U.S. to visit his mother in Florida several times a year and lately has spent part of the summer in Chicago helping out a friend with a dealership there. He also spends a good amount of money on health care. He says that while flights can be had for as little as $350 roundtrip during offseasons, the cost can be much higher the rest of the year.

In the saddle.


Martin Farber

Health care: Farber, who has permanent resident status in Costa Rica, says he pays about $90 per month to participate in the country’s health-care system — adding that the health care he’s received has been very good. (A 2018 study of health-care quality and access in more than 190 nations ranked Costa Rica No. 62.)

When he developed a detached retina, though, he paid for the procedure out of pocket so that he didn’t have to wait for the required surgery, he says — adding that the entire procedure cost him about $5,000. “I would have had to have waited four days,” he says, if he had not paid to expedite matters. “That might have been fine, but it might not.” And he adds that the quality of care depends on where you get it in the country.

Lifestyle: Though Farber says that he “moved here with no goals and no agenda,” he’s found plenty to do. “I take Spanish lessons two days a week for two hours a day. It’s been great. I never thought I would acquire a usable language in my 60s,” he says. He also rides his bike all around the area, does some writing and belongs to a community group that undertakes projects to improve the area.

And he often simply takes in nature, which he says has been an essential part of why he feels calmer and more relaxed in Costa Rica than in the U.S. “I live at 3,000 feet but in a valley surrounded by coffee fields and lime trees and water. At night, if I open the windows, I can hear the river rushing by,” he says. “It is very calming … hundreds of trees everywhere … you know the Earth is alive.”

The historic Iglesia de San José de Orosi.


iStock

Cons: “I don’t want to overglorify. It’s not without its problems,” Farber says of Costa Rica. “There are social problems and downsides.” He notes that crime and petty theft can be a problem (“I am cautious,” he says of his approach) and seem to have increased since he moved there, and adds that he misses out on some cultural things because of where he lives. And, he says with a laugh, “I can’t order Thai food at 9 at night.” But, he adds: “These are trade-offs — in the afternoon, I get to walk in the coffee fields and see flocks of parrots.”

Residency: To qualify for Costa Rica’s pensionado visa, expats must prove that they have a pension of at least $1,000 coming in each month. (Here are the details of that program.) Once you have lived in Costa Rica for three years, you can apply for permanent residency. Farber used a lawyer to help him figure out the ins and outs of residency options; his entire path to permanent residency took about a year, he says.

The bottom line: “After five years I am still amazed and surprised that I made the decision to lead a life I never thought I would,” he says. And while he may not stay in Orosi forever — “the town doesn’t have an ambulance, [and] I don’t know what it will be like to be 80 there,” he says — he does plan to stay in Costa Rica in no small part because of the people and sense of community. “I have the feeling that life is good here,” he says. “It’s hard sometimes, but we are all in it together.”



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Mutual Funds Weekly: These money and investing tips can help you read the market’s signs and stay on your path

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