The Market and The Election

People often ask how the stock market will react to who wins the presidential election.  I couple of elections ago I heard an economist give a very rational explanation of what happens around major elections.  It was that the market doesn’t like uncertainty.  It’s not a matter so much of who wins—although history does seem to show some economic trends that seem to follow the style of leadership the country has—it’s just knowing that a decision has been made.  It’s never wise to do market timing or other speculative moves based on what the political system will do to our economy.  For instance, last fall I heard a very credit economist say that the Democrats were obviously going to win the next presidential election and Hillary Clinton was obviously going to be the Democratic nominee, therefore, Hillary Clinton would be our next president.  He then gave an economic forecast with that basis.  For obvious reasons, I’ve thrown away my notes on that presentation. 

 

Having a good foundation of diversified investments, enough money in accessible savings for emergencies, and a regular program of socking money away is a good plan to get through the coming election season.  No matter who wins. 

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