| | | | | We’ve hit the point in 2020 where we are constantly reminded that we need to Elect a President this year. We see and hear calls to vote just about anywhere and information on when, how, and where to vote is widely available. We are constantly reminded that this election affects everyone and our vote is incredibly important. | | In a sense, this is true for investors. The stock market has usually been an indicator on who will win the presidency. For those that may not know, the stock market has accurately guessed who will win the presidency since 1984. If the S&P index is up three months before an election, it usually indicates that the incumbent party will win the election. If the S&P is down three months before an election, it is usually predicted that the challenging party will win. | | Now, I’d like to stress that this method does NOT guarantee a winner. In fact, the stock market has wrongly predicted the winners of the 1956, 1968, and 1980 elections. It just so happens that the market hasn’t been wrong since 1984. | | | | | | |
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| | | What does this mean for my investments AFTER the election? | | Well, it’s important to look at what each presidency will mean for the stock market. A Republican Administration will mean tax cuts for the wealthy, but possible rising trade tensions with other countries. Meanwhile, a Democratic Administration would mean tax raises for the wealthy, but maybe more government spending. | | No matter what happens after the election, there is a high chance that Americans will get a second stimulus package. This means that even if the stock market goes down, a quick surge will bring it right back up. | | Come back next week when we will talk about three stocks that will rise regardless of the election outcome. | | | | | | |
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