As elections approach, speculation about their impact on financial markets intensifies. However, the election results are only one of many factors shaping market behavior, and short-term volatility often arises from a complex mix of economic indicators, global events, and investor sentiment. While the market’s immediate reaction to political and other events is unpredictable, focusing on a long-term investment strategy can provide investors with greater confidence to navigate the uncertainties of the election cycle.
This newsletter highlights key metrics observed during various presidential terms, demonstrating that financial markets have consistently shown resilience, regardless of the administration in power. While we believe that the outcome of the upcoming election is unlikely to drastically alter this trend, history shows that financial markets generally prefer a mixed government, where control is divided between parties.
Financial markets often favor a mixed U.S. government because it typically promotes a balance of power that can lead to more stable and predictable policies. When both major parties share control, there’s a greater need for compromise and moderation, which reduces the likelihood of extreme policy changes that could disrupt economic growth. This political equilibrium tends to reassure investors, providing a more reliable environment for business expansion and economic performance.
Source: DFA
In light of the challenges brought on by Hurricanes Helene and Milton, we hope you and your loved ones are safe and that disruptions have been minimal. The IRS has announced relief options for those impacted by Hurricane Milton, including extended deadlines and additional support. For any questions or assistance, please don’t hesitate to reach out.