Market Response to a Contested Presidential Election

November 3, 2020    |    Sage Capone

There has been some talk with my Hawaii Investors about a contested election so I thought it might be a good idea to review how the markets moved during the 2000 contested election.

 The key dates for an election:

  • November 3 Election Day
  • December 8 is the date when states have to resolve disputes
  • December 14 is when the electoral college votes
  • January 6 Congress certifies the electoral vote
  • January 20 is inauguration day

Composite Index Tracked Over US Presidential Cycles

In the year 2000, November 7th was election day and vice president Gore retracted his concession the next day, leading to the Florida Supreme Court permitting a manual recount.

This went on until the Florida Supreme Court stopped the recount and Gore conceded on December 13th.

From the election day to December 13th, the S&P 500 was down about 5%.

A more granular look at Equity’s shows that during that recount period, low volatility stocks were higher to almost to all other indexes meandered with a negative bias.

As we know, equities are only one part of a diversified portfolio. Bonds and gold for example, both diversified in comparison to equities were broadly higher. Making a moderate balanced portfolio down only about 2%.

While there are policy differences between the parties, as far as the markets are concerned there is no real difference.

Reviewing data back to 1789 with a Republican versus a Democrat with a four-year cumulative return, Republican return has been 49% and a Democrat return has been 46%.

This trend should hold true for Hawaii retirement planning and Hawaii residents.

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