For Long-Term Investors, Small Things Like Presidential Elections Don’t Matter


So far, based on these factors, it might seem that a Trump victory would be preferable for most investors. Yet, as I’ve pointed out, a solid BofA Global Research report came to the opposite conclusion.

Mr. Biden, these analysts said, would probably boost the economy by improving public health through a more rigorous and scientific approach to the pandemic, increase American trade and engage in infrastructure spending that would give the economy a chance to expand.

What’s more, even when it seems apparent that a president’s policies would produce stock market riches for specific companies, it often doesn’t work out that way. For example, Mr. Trump’s environmental policies have been favorable to Exxon Mobil, yet that company’s stock has been one of the worst performers this year. Through September, its 48.1 percent decline, on its own, subtracted 9.6. percent from the return of the entire S&P 500 index, according to Howard Silverblatt, senior index analyst for S&P Dow Jones Indices. On the other hand, Amazon, which Mr. Trump has tried repeatedly to punish, gained 70.4 percent through September, and accounted for 47.2 percent of the S&P 500’s gain through September.

In short, the law of unintended consequences is as powerful as any political party. I don’t know which candidate would be better for the stock market as a whole or even for specific stocks.

Instead, I share the radically agnostic view of Mr. Booth. “Vote with your ballot, not your life savings,” he said, adding that markets are far too complex to make judgments based on elections. As I’ve noted, the market has done better under Democrats, not Republicans, though I doubt that those results are statistically relevant. The more important point is that stock markets have risen and fallen under both Democratic and Republican presidents — and more often than not, they’ve risen.

Capital ultimately finds a way to make profits. That is great for investors but by no means an unmitigated boon for everyone else. To the contrary. As Thomas Piketty pointed out in his landmark book, “Capital in the Twenty-First Century,” the stock market is a channel through which wealth discrepancies widen.

Still, by holding broad, low-cost index funds for very long periods, it’s possible for people of relatively modest wealth to prosper financially, despite the madness in the world and regardless of the results of presidential elections.



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