With the U.S. election taking place on November 3rd, many investors have raised the following questions:
- “How will the U.S. presidential election impact my portfolio?”
- “Do we need to do anything to protect against a setback in the markets that may occur leading up to, or following, the U.S. election?”
This year marks the 59th U.S. presidential election, with the first occurring in 1789. Although we don’t know who will be elected or how the markets will react, what we can look at is how markets have reacted in the past. When we reviewed U.S. financial market returns from past U.S. elections, we discovered that U.S. financial markets have historically generated positive returns in 19 out of the past 23 election years from 1928 to 2016, which is 83% of the time.
Given the historical results, complemented by the fact that it’s impossible to predict the future, we believe the prospect of a Joe Biden or Donald Trump presidency should not affect how portfolios are managed. Our advice is to continue to invest based on your goals and objectives, not the political cycle.
For further U.S. election information, please click on the following attachments:
- “How Much Impact Does the President Have on Stocks?” – an excellent interactive exhibit created by Dimensional Fund Advisors.
- “Elections 2020: Key Issues for Investors” – published by the RBC Global Portfolio Advisory Committee.