By: Steven Weintraub
Elections have been part of the U.S. landscape for 232 years. However, Shakespeare wrote the WCF playbook on investment strategies 200 years earlier when he penned Much Ado About Nothing.
To inform our communications on the eve of the 2020 Election we dusted off our 2016 note (summarized below) and had an epiphany…not much has changed:
With only 39 days before the election, Biden leads Trump in the polls1 and in the betting world.2 The stock market shows no trend that could be associated with any specific outcome considering this exceedingly well-publicized data. Why? Because Congress will call the shots on many economic policies. Because the polls were wrong in 2016 and the outcomes are far from certain.
Betting on the combination of POTUS and/or Congressional races is fraught with risk. However, some truths about elections appear to be consistent.
Although this pattern can be identified, does that make it actionable? Would we jump out of the market today with an eye toward buying back during the second week in November? No.
Whatever influence government might normally wield will be subordinated to today’s realities that include:
The biggest differences between the candidates may be in their tax and spending policies. These may have some financial planning implications… but we will continue to avoid market timing, select stocks based on balance sheet strength, profitability, and valuation, and remain tax-sensitive on your behalf.
Whatever short-term noise arises around the election, we channel King Lear as long-term investors, “Nothing will come of nothing”.