Presidential Elections and the Market: What History Tells Investors

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As markets move ever closer to the hotly contested and wildly debated 2020 presidential election, the question on every investor’s mind is “What’s next?”. While we lack a crystal ball, we do have history and a finance specialist or three to help.

Mike Hanson, senior vice president of research at Fisher Investments, Real Money contributor Bob Lang and Larry Siegel director of research at the CFA Institute Research Foundation, joined TheStreet contributor Laura Petrecca to break down what elections mean for Wall Street, and just as importantly, how the average investor can prepare for whatever comes next.

Hanson suggested that investors look beyond who is or who could be president and look at how a presidential cycle historically impacts stocks. Despite the unprecedented events of 2020, Hanson said this year is more business as usual than some investors may realize. “Presidential fourth years tend to be positive. They also tend, though, to be flattish leading up to the election and then their backend loaded. You tend to see kind of a relief rally once the election has happened. And in fact, even though the path to get there has been completely bizarre this year, [we believe] we're right where we ought to be for a presidential fourth year,” Hanson said.

Agreeing with Hanson, Lang added, “I think that once the election results are out and that uncertainty is removed that we should see a little bit of a market rally after.”

But how have markets reacted when Republican and Democratic administrations are compared?

Catch more lessons from history and what you can do to prepare your portfolio in the last weeks before the election in the full webinar. 

Investing in stock markets involves the risk of loss and there is no guarantee that all or any capital invested will be repaid. International currency fluctuations may result in a higher or lower investment return. This document constitutes the general views of Fisher Investments and should not be regarded as personalized investment or tax advice or as a representation of its performance or that of its clients. No assurances are made that Fisher Investments will continue to hold these views, which may change at any time based on new information, analysis or reconsideration. In addition, no assurances are made regarding the accuracy of any forecast made herein. Not all past forecasts have been, nor future forecasts will be, as accurate as any contained herein.