What are your thoughts on the US Elections and how it might impact the stock markets?

I do not give any political opinions but I’ll list some facts.

Historically, the market has done better on average with a democratic president compared to republican by about 4% per year.

The market usually performs better in the short term if the incumbent party wins. However, longer term, democratic president on average has seen better performance in the market.

Historically, during September and October if the markets went down at least 5%, there is a 85% chance the incumbent party losses.

Do note that the market moves ahead of the election, it doesn’t have to wait for results.

Hi Anonymous,

If you allow me to answer this way: in 2016, almost everybody said that if Trump wins, the stock market will go down and the USD would go down, because he was protectionist. However, the stock market and USD went on to deliver one of its best years in history.

Elections and geopolitical risk are ultimately short-term events. The key to successful investing is to ignore the noise and concerns of today and stay disciplined for the long term. Our conviction is that whatever happens in the short term, the stock market always goes up in the long term. This based on both logic and evidence. The logic is that the stock market prices are determined by company's earnings, and earnings depend on demand, and demand in turn, on global population growth and increase of standards of living. As long as capitalism survives in some form, then this economic growth will flow through into capital markets and shareholders will be rewarded. Of course, it only applies to buying globally diversified markets, not individual stocks. The evidence is from almost a century of data that shows how the stock market has been resilient across all kinds of crises.

Thanks for your question!