[vc_row][vc_column][vc_column_text]Hi there,
We hope that you and your families continue to remain safe! As the elections draw near – we wanted to share some insights on the election and its impact on the markets. History proves that markets perform well under both political parties.
What we know:
- Market performance is not exclusive to any given political party.
- Investors are better off staying fully invested.
- Predictions tend to be wrong.
- Market returns are an outcome of many variables; not just political outcomes.
Since 1950, there is no clear evidence that the six months leading up to an election are any different than other years. Additionally, the subsequent year to any elections provides returns only slightly lower than other similar periods in time – coming out of elections, markets tend to be more positive. At the beginning of the COVID-19 Pandemic, we shared that market growth is about participation, not timing, and this remains true for the election. If you only participate in a single political parties’ market gains, then you could limit your opportunity. You are better off staying fully invested.
Presidential history has also shown us that predictions tend to be wrong. The election of 2016 proves that the “experts” aren’t great at predicting outcomes. A review of those 24 hours after the presidential election may help us see that this year is no different than any other election year.
Many considered Hillary Clinton a shoo-in for president, but global markets were thrown into a tailspin on the election night as Donald Trump’s victory emerged. Asian markets declined sharply, European markets followed suit, and when the race was called in Trump’s favor, US futures took a tumble. However, by the next morning, many were amazed to find US markets opening to a loss of only 1% and seeing gains in several key areas. By the time markets closed on November 9th, they rebounded. As surprising as it seemed, the 2016 market reaction wasn’t actually that unusual when compared to past elections. The S&P 500 has historically fluctuated an average of 1.5% on the day following a presidential election. And those fluctuations have been far from predictive.
Furthermore, the market’s response to election results has shown the next 12 months of market movements have been correct 50% of the time, giving it all the predictive power of a coin toss. This review shows us that surprises happen, and as much as we crave certainty, we cannot determine how an election or any other event will influence financial markets.
The overwhelming majority of what happens in the US economy depends on you, me, and the businesses we work for and patronize. Overall, government impact is only a small portion of the overall economy – the economy is what drives the markets.
Despite the outcome and whatever happens to the markets, you should have peace of mind knowing that we’ve planned for times like these, and you have us in your corner to help with any of your needs.
“Be sure you put your feet in the right place, then stand firm.”
-Abraham Lincoln
Regards,
Niki, Mindy, Cyndy, Sheana & Susie[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_separator color=”custom” accent_color=”#7aa5ba”][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]
H. Nicole Mullinix & Mindy M. Zatta are registered representatives of Lincoln Financial Advisors Corp. Securities and investment, advisory services offered, through Lincoln Financial Advisors Cor a broker/dealer (member SIPC) and registered investment advisor. Insurance offered through Lincoln affiliates and other fine companies.370 Southpointe Blvd., Suite 200, Canonsburg, PA 15317-8537 724-743-6165. Astyr Wealth is not an affiliate of Lincoln Financial Advisors. CRN-3144940-062920
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