There’s been some excitement in the US with the recent replacement of President Biden with Vice President Kamala Harris as the new Democratic Presidential nominee.
Here’s a recent news headline of Harris blasting Trump
Sheesh. I certainly wouldn’t want someone in power with a vision of ‘chaos, fear, and hate.’
Here’s another headline from the New York Times:.
Again, I don’t want a radical in charge. Nothing good ever comes from radicals.
With polls showing Trump with only a minor lead now, this is going to be an exciting one. It’s going to be a fascinating next few months. Be sure to bring some popcorn for that next debate.
With the election set to take place in November, you can expect to be inundated with predictions about how the winner will impact the markets and the economy.
You may feel you need to alter your portfolio based on who wins, but this becomes a futile exercise once you realize how much there is that we don’t know about what comes next. Not only do we not know who is going to win, but also:
- We don’t know the specific policies that will be prioritized and enacted by the next administration.
- We don’t know how cooperative or obstructive the opposition party will be towards these policies.
- We don’t know how the new leadership will influence consumer behavior and economic confidence.
- We don’t know which industries or market sectors will thrive or struggle under the new administration.
- We don’t know how the market will interpret and respond to the election results, or what assumptions are already factored into current prices.
When Trump first got elected, there were pundits and investors galore predicting an enormous market crash. Instead, stocks rose steadily for most of his first term until the pandemic hit. There were more than 130 new all-time highs on the S&P 500 during Trump’s tenure.
When Obama first got elected, there were people predicting, “[His] Radicalism Is Killing the Dow.” Instead, US stocks set off in 2009 on a bull market that lasted for the entirety of the next decade. There were nearly 130 new all-time highs on the S&P 500 during Obama’s tenure.
When it comes to the markets or economy, presidents get far too much blame when things go poorly and far too much credit when things go well. There’s no way one person could singlehandedly control the $50 trillion U.S. stock market or $28 trillion U.S. economy.
Sure, the president can have an impact on sentiment, and tax rates do play a role in the decisions consumers and businesses make, but where we are in the market cycle has far more to say in regards to the performance of the markets over anyone’s time in the Oval Office.
The market is bigger than any person or office. It will do what it’s going to do no matter who lives in the White House. The long-term trend of the stock market has been up and to the right no matter who the President is.
Regardless of who wins, it’s important to keep politics out of your portfolio. Money decisions are already rife with emotions, biases, and blind spots. Bringing politics into this equation only amplifies those emotions and makes it nearly impossible to make rational, clearheaded decisions.
