This is one post in a series based on our “Quarterly Questions & Answers.” Each post covers one of the important topics we discuss with our wealth management clients. Today’s topic is:
Who is better for the stock market, Trump or Clinton?
Many investors would assume that a billionaire, businessman president would be great for the stock market. And Donald Trump may have some pro-business policies that could cause the stock market to soar.
But you know what businesses and the stock market really like? Predictability. Because while predictability tends to be good for stocks – uncertainty only increases volatility.
You might not like her policies, but Wall Street likely knows more of what they’re getting with a Hillary Clinton presidency than with Donald Trump.
We aren’t really sure what President Trump would try to do from an economic policy standpoint. Perhaps his policies would be good in the long-run, but the market is unlikely to react well to short-run uncertainty.
Neither Hillary Clinton nor Congress would be likely to run away with any radical new legislation, so what we’re anticipating is likely a continuation of the Obama administration’s major fiscal policies. On the other hand, Trump has shown his ability to be a bit more unpredictable, which has the potential increase volatility as investors guess at new developments.
Either way, it’s unlikely that either Trump or Clinton would enact any big changes without some compromise with Congress. And you know what else the stock market likes? Compromise.
And given historical data that shows a Democrat President and Republican Congress has produced the best historical returns from 1961 to 2010, this makes compromise even more important.
Keep in mind, you shouldn’t make investment decisions based on speculation about who will be President. It’s more important to your portfolio to focus on your family’s financial goals, time frame and risk tolerance in your financial planning rather than focusing on who is going to win the next election.
Want to know more? Check out the rest of the posts in this Series:
- Higher interest rates: How am I positioned with interest rate risk?
- How the value of the dollar impacts investment portfolios
- Department of Labor’s Fiduciary Rule: What does it mean for retirement accounts?
- Mutual Fund and Exchange-Traded Fund (ETF) Fees: How to take advantage of reduced fees in your portfolio