With today being Election Day, our first and most important message is get out and vote. Voting is a right and of course key to a democracy.
Now that we told you how important it is to go out and vote, let’s take a look at the other side. When it comes to stock market performance, we would argue that election outcomes are not particularly important. Regardless of the election’s outcome, the S&P 500 Index has been positive during the 12 months following the midterm election 18 straight times going back to 1946. ”While many think gridlock is good because it generally takes political extremes off the table, stocks have staged a relief rally of sorts after elections regardless of the results,” explained John Lynch, LPL chief investment strategist. No matter who controls the House and Senate for the next two years, we think stocks are a good bet to move higher over the balance of 2018 and probably through 2019 as well.
That doesn’t mean policy-sensitive sectors and industries won’t react to the outcome. We will offer some of our thoughts on post-election winners and losers here tomorrow and in upcoming publications. Bottom line, for those voting Democrat, we wouldn’t sell stocks just because the Republicans may sweep. And for those voting Republican, we wouldn’t sell stocks because the Democrats sweep. Note that the latest polls suggest the Democrats will take the House and Republicans will hold the Senate, but given political surprises in recent years, we would not be shocked by any outcome.
Considering the deep domestic political divide, as well as the ever-present global challenges, we believe investors should prepare for further bouts of market volatility in the year ahead. As always our focus will not be on political headlines but rather will emphasize the solid fundamentals supporting economic growth, the direction of interest rates, and the impact of record corporate profits on the financial markets.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual security. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The economic forecasts set forth in this material may not develop as predicted.
All indexes are unmanaged and cannot be invested into directly. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment. All performance referenced is historical and is no guarantee of future results.
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This research material has been prepared by LPL Financial LLC.
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