Every investor out there and pretty much every American has an opinion on the Election. Still, according to data, it will have almost no impact on your investments in the long haul. The fact of the matter is long term investors don’t care about the Election. While there will probably be some short term impact on prices, long term investors will be fine.
The news says Joe is a socialist and will raise taxes. Trump will wage a trade war and will lose businesses to COVID. There has also been a debate on the potential for a “blue wave,” which is Democrats gaining the majority in the Senate, winning the White House, and maintaining control of the House. But does any of this rhetoric affect my investment strategy?
Putting every other issue aside except investing, which party is better to have in power? Democrats or Republicans or both?
Is a Red or Blue Government better for my investment?
Analysts love digging through data, and they have reviewed every Election for the past 78 years and found that either party controlling a chamber of Congress has little impact on long term changes to the S&P500 index.
Research from LPL Financial in particular found some interesting trends that begin in 1950. They found the average annual stock return was 17.2% under a split Congress, 13.4% when Republicans held both chambers, and 10.7% when Democrats had control.
The market likes two things gridlock & balance of power. This prevents uncertain changes and regulations, aka keeps everything stable. When one party controls it all, there are concerns in the markets over what the party will do as they will most likely be able to fast track any agenda.
The answer to the question of what party is best for your investment? It is a Red & Blue government! So let’s go to Red White and Blue! (White can be independents to get all the American colors in there!)
To further breakdown, the impacts of government by party, see the table below created by CNBC:
While some stocks will perform better under one party or the other, the vast majority of your investments will perform positively regardless of the party in power.
Examples of some of the outliers would be, infrastructure-related & clean energy companies will do better under a Biden administration while oil companies & defense contractors are more favorable choices under Trump.
Who wins elections and which way the market is going is something traders are concerned about. Long term investors should continue to follow their plan and ignore the short term noise.
Regardless of who wins, you can improve your financial position more than any elected official can, and it is possible to make it happen! If you need help getting started check out How to Build Wealth!
God Bless America!
This post is my opinion, which is strictly for information & educational purposes only. The post is not intended to provide any investment advice. Please seek your own duly licensed professional for investment advice as they will be able to consider your situation. Please read my Terms & Conditions Page for a full disclaimer.