By Justice Allen
- S&P 500 improved by 13.6% when a Democrat is president and the House + Senate are split between parties
- Goldman Sachs predicts that stocks are on the up and up heading into 2021
The election results are in, but what does that mean for the stock market? The financial markets are bound to see some sort of impact, but according to analysts research, that impact is largely based on whether a new party is taking over the White House or not. Typically, a year after the presidential election when a new party takes over stocks are down by about 1%, and when the incumbent party stays, stocks are up an average of 14.4% a year after the election.
Why This Matters: With Biden taking the “W” in this year’s election, Goldman Sachs predicts that stocks are on the up and up heading into 2021. CNBC recently reported that in Sam Stovall’s 75-year stock analysis of six different political scenarios, stocks seemed to be at their best when a Democrat was president. In 2012, 53% of the Black population identified strongly as a democrat, now that number is less than 50%.
Fundstrat, mentioned that 90% of their portfolio strategy would be identical under either party
If you’ve got money tied up in a 401K, you’ll want to pay very close attention to what the election means for the markets. Healthcare and technology could see major changes, so it’s important that investors be mindful of where their 401K dollars are being invested.
That being said, you shouldn’t put too much stock into these forecasts (pun intended). Tom Lee, Managing Partner at Fundstrat, mentioned that 90% of their portfolio strategy would be identical under either party.
What’s Next: We can’t forget about the impact of the coronavirus, which has played a pivotal role in this year’s election. It’s still early on, but we’ll keep an eye on how the markets respond to Biden’s election in the coming months.
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