Note: Our political discussion is non-partisan and we analyze politics solely for market impact, as markets prefer no candidate, party or ideology. We believe political bias is a blinding behavioral investing error.
On November 8, voters went to the polls and cast their ballots after the highly tumultuous presidential campaign between Democrat Hillary Clinton and Republican Donald Trump. About 130 million voters cast their ballots in what has been labeled one of the most divisive campaigns in American history. And, the voters have spoken—Donald Trump will be the next president of the United States. Crossing the necessary 270 electoral vote threshold, Trump defied expectations winning several key battleground states, largely due to better-than-expected rural turnout.
Love or loathe him, we encourage you to watch what President Trump actually does, rather than what he says. Candidates often promise big, sweeping changes when campaigning, but the realities of American politics constrain them once they become president and few of their campaign proposals become reality. Or even if they do become reality, they are a shell of their initial proposals and less bad than most people fear. The US government is set up by design to do exactly that. Legislators (in both parties) are loathe to support extreme proposals—as it endangers their reelection chances—making sweeping changes unlikely.
Short-term volatility around an election is normal, but historically, most election-related moves have been fleeting. In time, markets likely adjust and move on as they see Trump can’t do as much as he says, or as much as they fear—a positive surprise.
As an investor, it’s important to understand how the election outcome and new presidency could affect your portfolio. We’ve analyzed the market implications of presidential elections historically and discovered some important trends you’ll want to pay attention to as Inauguration Day nears and we enter a new presidency.