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Major US stock indexes rose during the week as election projections brought Democratic candidate Joe Biden closer to a victory in the White House.
US President Donald Trump has repeatedly promoted rising stock values as a sign of his economic success. However, the gains over the past week suggest that the market is not dependent on him for continued growth.
Before Election Day on November 3, the US financial markets were already sending signals that they expected a Biden victory and a “blue wave” of Democratic Senate victories. The blue wave may not have occurred, but expectations of greater stability from the White House and the possibility of a large stimulus package boosted sectors, including consumer staples.
Some investors cautioned against going too far when considering a choice when considering a retail or institutional investment portfolio strategy.
Commonwealth Financial Network chief investment officer Brad McMillan said he saw this happen repeatedly, including twice that President Barack Obama was elected. “Investors were convinced that this was it, this was the end,” he said. “The reality is that if you go back a bit and look at both the economy and the markets, you can’t tell if it was a red administration or a blue administration.”
Even with legislation like the Tax Cuts and Jobs Act passed in 2017, McMillan believes the U.S. economy is largely disconnected from politics, and whatever influence an administration may have is largely on the sidelines. . “From my perspective, as an investor, I don’t care who wins,” he said. “As a citizen, I certainly do, but as an investor, we will be fine in time.”
Chris Zaccarelli, chief investment officer at the Independent Investor Alliance, echoed the sentiment. “Many of the exchanges we do are designed to work regardless of who wins the presidency,” he said.
In such a divided political climate, it is a very reasonable strategy.
