In a note to investors, Natixis Global Asset Management chief market strategist David Lafferty commented that making assumptions on the impact a candidate will have on a certain type of stock is “a poor way to build a durable portfolio”.
“Proposal differences pre-election are always bigger than implementation differences post-election; divided government ensures that presidents get only a small portion of what they want. In general, this means that investors tend to put too much weight on election outcomes vis-à-vis portfolio expectations,” he said.
Historical evidence would support this theory according to Vaughan Nelson Investment Management chief executive Chris Wallis.
“If you look back at U.S. presidential history for over 180 years, you will see that the elected president has never really had a big impact on the financial markets,” he said.
“In the longer run – past the short-term market blip that can occur with an election surprise – the president’s policy choices have been pretty irrelevant to financial market performance.”
Fiscal policy from either nominee is likely to be productive, Mr Wallis said, adding that “it doesn’t take much to be productive” and no politician gets re-elected unless the economy is growing.
Additionally, Mr Lafferty said modest corporate tax reforms were more likely than major policy changes, regardless of who wins the election.
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