Stock markets after the election

Presidential elections
are something that everyone gets excited about but
in my view are regularly interpreted incorrectly as it relates to investing
in the stock market. Most people have the view that if
my candidate wins it's going to be great and if my candidate loses
it's going to be bad. The fact is markets pre-price
widely known information and candidates and campaigns fit into that realm pretty
tightly and there's a very long history. One of
the lessons that I teach people over and over is that when
there's a very long history of something with a certain regularity
like presidential elections and stock prices
in parallel you look to see if there's any secrets there
and there's this pattern that's almost perfect
and the pattern that's almost perfect is that
the democratic candidate tends to scare stocks
more if the democratic candidate is going to win
in the election year than if the republican candidate is going to win
in the election year because the democrats seen as more anti-business
republican candidates typically seen as more pro-business
more anti-regulatory but then that flip-flops in the
inaugural year and this is the part that people don't get.
If this year, vice president Biden were to prevail in victory that would
dampen returns in the back half of the year
from that fear, but then the inaugural years
of democrats were overwhelmingly better than the inaugural years of republicans.
In the two years together–republican and democrat–
two years election year and inaugurated have almost identical returns it's just
a difference in timing. In fact if you go back through the
history of most of the 20th century, back to the
days of Franklin Roosevelt when we've had a democratic inaugural
year they've been double-digit positive every single time with the exception of
jimmy carter whose inaugural year was only a negative seven percent.
The republican years can the republican victories tend to be strong in the
election year, weaker in the inaugural year. So that's
pretty much the impact that you should expect this presidential election to
occur depending on which candidate wins and of
course the good news is and i've studied this and i'm going to
make a bold prediction we're going to get a winner.
We always get a winner and we always find at the end that the winner
isn't as bad as we feared the winner was before we got to the election.
So i've said the way to think about this it's just a matter of the timing of
which does better, but overall i know you want to think
that your candidate would make things great and
the other one would make things terrible but for the stock market it doesn't work
like that because market's pre-price. Subscribe to the Fisher Investment
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