What does this presidential election mean for your portfolio?
By Clarity Point on October 21, 2020
With the election now just two weeks away, all eyes are beginning to shift to poll results. Investors are naturally wondering which party may win and how the outcome of the Presidential election may impact their portfolio. While the increased emotions and speculation surrounding the outcome of an election certainly have the ability to create some short–term volatility, election results don’t tend to be as impactful to investors in the long run as they may assume.
The chart below illustrates the performance of the stock market (as represented by the S&P 500) over the course of many decades showing each respective party in control of the White House:
In fact, if you consider the historical performance of the S&P 500 Composite Index over the past eight decades, in eighteen of the nineteen U.S. Presidential elections, a hypothetical $10,000 investment made at the beginning of each election year would have gained in value ten years later. That’s regardless of which party’s candidate won. In fifteen of those ten year periods, a $10,000 investment would have more than doubled!
To lend some additional perspective regarding catalysts that may impact financial markets between now and election day, we share these thoughts from Stephanie Link and Joseph Klein from Hightower’s Investment Solutions group: 5 Catalysts Between Now & Election Day.