As we have mentioned previously we believe there may be some market volatility after the election. We have seen some of this already as the markets react to polls. The only thing more uncertain than polling date is short term market movements. While the markets very well may react to either candidates election it seems that it may react more negatively to a Trump win. Either way it is important to remember that emotion is something we all should strive to eliminate from investing decisions. Much of what may occur in the markets initially will be based off emotion. We compare it to the post Brexit reaction. Remember, the markets recovered much of those loses within days.
The longer term effects a President has on markets and economies are often not determined for years, if ever. Many policies either never come to fruition or get so watered down through the actual political process that the effects are minimal.
Like many of you, we are ready for it to just be over. And therein lies what we think could be the biggest issue to markets. If we wake up on Wednesday without a clear winner then the process could be extended for weeks or months. Our assumption is the markets will not like that sort of uncertainty. That is the worst case scenario as far as the markets are concerned.
We are certainly not recommending clients make changes to portfolios based on any of this. Speculation and market timing is not something that puts the odds in investors' favor. It is important to look at the long term and take as much emotion out of investing as possible. This election makes it much harder for investors because of the amount of emotion involved this time around. As always, however, let us know if you have any concerns you'd like to discuss.