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.
Presidential candidates Hillary Clinton and Donald Trump exchanged barbs in the second of three debates on October 9th. The town-hall style debate was held at Washington University in St. Louis, Missouri. CNN’s Anderson Cooper and ABC News’ Martha Raddatz moderated the debate, which featured live audience questions. The questions focused on high-profile issues such as healthcare, immigration, energy and tax policy. However, the debate frequently went off-topic, sinking to personal attacks at times.
As Election Day nears, both candidates will likely continue detailing their prescriptions for the country and launch fiery attacks against each other. In turn, media pundits will debate which candidate or party they believe will be best for the economy and stocks. While Republicans fear Clinton will do extraordinary things, Democrats fear the same of Trump.
We encourage investors to watch what politicians actually do, rather than what they say—however entertaining or worrisome the talk may be. Candidates often promise big, sweeping changes when campaigning, but the realities of American politics constrain them once they become president, and few of their extraordinary proposals come to fruition. Polarizing campaign rhetoric certainly might increase volatility in the short term, but presidential power is more limited than often portrayed, and there are other, more powerful political factors that typically influence market movement over time.
As an investor, it’s important to understand how this year’s election, and the events that follow, could affect your portfolio. We’ve analyzed the market implications of presidential elections historically and discovered some important trends you’ll want to know about before November.