The Labor Day Holiday has now concluded, and summer has reached its official end by most measures. It’s now the final stretch for the 2016 election season. Or at least that is what I am seeing over and over again on my internet browser headlines. 2016 seems to be a particularly charged election with alleged “drastic consequences” with the election of either presidential candidate. I have heard on more than one occasion that investors have decided to “wait and see” before they take any action, based on what the election outcomes will be.
Out of all of the possible events to effect the market, I can tell you that political elections on the whole are vastly overblown. Now, I am sure the market will have a temporary, one or two day reaction; but it isn’t likely to change it’s trajectory. The media is very good at playing on peoples’ fears and emotions, making dire predictions about things to come should [fill in the blank] be elected. The very thing that could effect economics, i.e. economic policy, is not set by the president. The Federal Reserve will continue to set interest rates, while it takes the cooperation of congress to pass fiscal policy.
Here are some interesting things to note. By many sources our two greatest presidents were Lincoln and FDR. Were these people admired by all? Were they destined for greatness from day one? No. One was a Republican, the other a Democrat. Neither were without their detractors. In fact Lincoln’s path to the presidency is rather interesting. He was certainly not the clear frontrunner for his party’s nomination. In fact, part of his plan for nomination entailed printing counterfeit convention tickets for his supporters at the 1860 convention. http://www.greatamericanhistory.net/nomination.htm. That doesn’t sound very distinguished to me. And FDR had plenty of detractors in his time. Although fondly remembered, he took a lot of criticism from Republicans, but also from other liberals on the left, many of them against the Civilian Conservation Corps’. He also broke with tradition by running for an unprecedented 3rd term. The bottom is you can never tell how any one presidency will actually turn out once they get into office.
But furthermore, there is not clear evidence that the market does any better under a democratic or republican house/senate/or presidency. There are not enough data points to make a determination. And, the market has done very well under both– as business goes on regardless of who is in power. So if you are losing sleep over this November, my advice to you is to relax, trust the process our predecessors put in place for us, and focus on the long-term. The country will likely be around long after this next president leaves office.