How An Election Affects Markets
It’s time to discuss the elephant in the room, the upcoming election. I’m regularly hearing concerns during meetings about the upcoming election and its possible effects on the stock market. While I wish I could just tune out politics entirely, I suppose we can spend an article on elections and then get back to our regular programming soon enough. Here goes…
Here’s the big question: How will the markets react if _______ is elected?
Here’s the big answer: I don’t know.
There are many ways to approach this. One approach I refuse to take is the fear mongering method. A typical election cycle is now predicated upon fear. If you elect him or if you elect her, the world as you know it will cease to exist. That may or may not be true, but it’s a poor foundation for prudent decision-making for your financial matters.
As for the stock market, there are so many reasons for a possible market decline in the next year or two (interest rates, 12 years since the last huge decline, health insurance premium increases, cyberwar, a trade war with China, BREXIT, we’re-bored-so-we-need-a-big-shakeup, etc.) that trying to make a prediction based on one branch of the government in an economy this large is a tough call. Meanwhile, we’ve seen market growth despite all of that craziness.
When I need a logical, pragmatic approach to financial markets, I reach out to one of our investment strategists. Here is his response to the big election and markets question:
“I can only go on statistics and facts:”
Do you have enough?
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