The Election and Investors
Investors in the stock market are not blind to the trends of the election polls. Even the conservatively oriented polling organizations are showing a probability of a win for the Biden ticket.
We will see whether the current polls will be correct Tuesday (or sometime thereabouts). We only have to go back four years to see how the polls can be wrong, even close to Election Day. The consensus by many in 2016 was for a Clinton win and should Trump pull an “upset”, it would have been disaster for the market. And look what happened. Trump won and the market took off like a rocket ship the next day. So not only are expectations often wrong, but forecasting the outcomes of those expectations is difficult as well.
Even if an investor’s perceived “wrong party” wins, how do we weigh that against the potential for advanced treatment for COVID-19 patients, a widely available vaccine, or a stimulus bill that helps bridge the economy to a time when the vaccine is easily distributed? Which will be more important to the economy and markets?
Historically there has not been any significant difference in market returns under Republican or Democratic administrations. This time may be different, but every politicians’ biggest motive is to be re‐elected, and markets can be great disciplinarians on political policies that are perceived to damage the economy.
What markets do with regularity is move up and down, sometimes even big moves up and down like we have already seen this year. And as tempting as it can be, trying to time these unpredictable moves based on predictions/guesses is not a strategy for long-term success.
We often get a little more anxious around presidential elections. What we don’t want to do is to let our political inclinations dictate our emotions, and then let our emotions steer our investment strategy, which can be a challenge at times.
Thank you as always for your trust and confidence in us. Please do not hesitate to call with any questions or thoughts you may have.
The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Beach Foster and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Keep in mind that individuals cannot invest directly in any index, and index performance does not include transaction costs or other fees, which will affect actual investment performance. Individual investor's results will vary. Past performance does not guarantee future results. Future investment performance cannot be guaranteed, investment yields will fluctuate with market conditions.