What do the numbers 31, 37, 39 and 43 have in common? No, they are not the winning “Pick 4” lottery numbers. They are the only Presidents since 1921 to see the stock market decline during their tenure in office (Herbert Hoover, Richard Nixon, Jimmy Carter, and George W Bush).
Additionally, while on vacation this summer with my family, I saw a very entertaining billboard. It had a picture of Hillary Clinton and Donald Trump on it and beside their pictures it said, “Thinking of moving to Canada if one of them wins? Contact XYZ Realty and we will help you sell your house.” My family and I got a good chuckle out of that billboard.
So how are these 2 things related? They explain the election cycle that we find ourselves in every 4 years. I frequently hear that if candidate X gets into office the stock market is going to crash and the world will come crumbling down. However, history suggests that is highly unlikely. If you look back at the variety of Presidents we have had since 1921, you will find a wide range of political views and policies enacted. Yet, in most cases the stock market was higher at the end of their tenure. Why? The answer is buried in the aforementioned billboard. The realtor(s) does not care whose house they are buying/selling. Their sole purpose is to assist you in moving regardless of the reason why.
Every corporation in the world exists to assist you in exchange for a fee. Their primary concern is whether or not they will be able to continue providing you with a good or service in exchange for that fee. In most cases, that has very little to do with who happens to be the President. As previously shown, most good corporations have shown to be very adept at growing their business, regardless of who is in office. Corporations simply want to know the “rules of the game.” Thus, the more corporations know about the system that they will be operating in, the better they will perform (stock price rises). When there is uncertainty/surprises we should see short term volatility in the stock market (stock prices decline). However, as the uncertainty fades away, corporations go back to trying to growing their business.
Regardless of who becomes our next President, I am certain of 2 things. There will be volatility in the short term and corporations will eventually find their bearings to grow. It may be slow, but that’s why I wrote about the “mighty oxen” last quarter…
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.
The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
