How much impact does the US President have on investment markets ?

The US election . Does it have an impact on investment markets ?



Arch Capital Update – 30 October 2020

How much impact does the US President have on investment markets?

Welcome to today’s Arch Capital update.

Today is all about the impact of the US election on markets. The question really is, in the past have Presidents had that much of an impact on markets? Obviously with Trump in office it has been an interesting couple of years for the world, but generally the markets have been quite strong until coronavirus hit but even then they have rebounded. Obviously there are many factors that influence markets, not just who the President is. On Tuesday the 3rd of November the US will go to the polls, and it might be a couple of weeks before we know the outcome but what does this mean for investors?

Firstly, to understand this we need to look at history and put it into a bit of context. The graph below gives a timeline of US Presidents ranging from the Great Depression right up to now. As you can see, markets have generally been pretty positive. There have been dips in some bad years, but there has also been plenty of good years. No matter the result in the US, markets will do their thing. That is the main story.

Whilst there may be big changes on economic policy, where Democrats and Republicans have very different views on taxation and other policies, generally speaking this is not going to change market trends that much. Whilst we can only wait to see what happens, it is not something you should be worrying too much about. There has been a little bit more volatility in the market leading up to Election Day, but we remain diversified and we remain very structured around our asset allocations.

It is interesting and their process is fascinating from a political and economic point of view, but from your day to day markets, income and growth point of view don’t worry about the outcome of the election too much.

I hope this helps and of course always call and reach out if you have any questions.

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