Several clients have asked me what I think will happen with the stock market if Clinton wins the presidential election or if Trump wins.
Let me begin by stating clearly that I do NOT have a crystal ball. And let me add that this is not a positive or negative endorsement of either candidate. That I leave up to you.
However, as a watcher of the markets for the past 30 years I can tell you this much — the stock market does not like uncertainty.
While both candidates talk about what they will change if elected (don’t they all), in my opinion Donald Trump has positioned himself as someone who wants to make big changes while many believe that Clinton will be more of the same.
Regardless of whether either of those statements is true, it is my opinion and only my opinion, that there would be more uncertainty in what a Trump presidency would look like vs. a Clinton presidency.
Yes, Hillary would be the first woman President of the United States, but as someone who has been in the public sector for almost her entire life I doubt she would make any earth shattering changes that would send the stock market reeling.
Trump, on the other hand, is an unknown quantity. I don’t think there is a person alive including him who has a clear vision of what his presidency would look like, simply because of the fact he’s never served in public office before. Maybe his presidency would resemble other past Presidents and maybe it would look like something entirely different.
It’s that uncertainty alone that could cause the stock market to sputter should he be elected.
However, and I mean this in a BIG way, nothing that happens in the stock market after the election will be permanent.
We’ve been through a depression, recessions, and countless hiccups in the stock market, and always, yes always, it eventually rights itself and progresses upward.
The stock market is made up of companies that no matter who becomes President are going to be open for business the day after the election. They will go on with business as usual trying to make a profit and serve their shareholders.
So the bottom line here is, regardless of what happens in the short term, I think we are going to be just fine in the long term.
No one can accurately predict the stock market in the short term. If we could we’d all be sitting on a beach somewhere with a little umbrella in our drink counting our money. That, my friend, is why I don’t invest for the short term. I invest for the long term. And I invest all my clients’ money for the long term.
Just remember this — the absolute worst thing you could do should the market react negatively to whoever is elected is to sell out when the market is down. I’ve seen it happen over and over again to people who are not my clients — so many sell when the market is low and buy when the market is high. It’s human nature to want to sell when the market is free-falling but this guarantees low to mediocre returns at best.
Rule #1 in investing is to buy low and sell high.
So IF, and I do mean IF, the market reacts negatively to this election and IF you have some cash lying around it will be time to buy, not sell.
Just like when your favorite things are on sale it’s time to stock up. (Stock up — cute little play on words, don’t you think?)
And maybe, just maybe, the market will be so relieved that the election is over it will skyrocket. You just never know.
I’ll be paying very close attention to what the markets do (domestic and foreign) based on the outcome of this election, but rest assured, I will NOT be doing any buying or selling. All client portfolios are positioned well for any future event and unless there is cash to invest or a need for a withdrawal for that big vacation that is planned, all portfolios, including mine, will be riding the wave of whatever transpires.
Why? Because all portfolios are well diversified and invested for the long term — we have the rest of our lives to be invested.
And while we have absolutely no control over what the market will do in the short term, we do, however, have control over who our future leaders will be so VOTE!
Vote for who you believe in, or vote for the lesser of two evils if that’s how you see it, but VOTE. We live in a democracy so make your voice heard.
(End of soapbox — well — at least until next time.)
I’ll leave you with this — The Serenity Prayer: “God, grant me the serenity to accept the things I cannot change, the courage to change the things I can, and the wisdom to know the difference.”
Stay invested. Vote. And if we don’t get the outcome in the market that we want, remember, this too shall pass!