Many clients have asked for our thoughts about the upcoming election and how it might impact the stock market. The current trends show that there is a strong chance the legislative and executive branches of the government will be divided next year. The attached chart shows that the stock market performs better when the two branches are divided. An old saying gets to the heart of the matter “If the opposite of pro is con, then the opposite of progress is Congress.” A divided government works best, in our opinion, because Congress and the President are fighting each other – not the American people or American business (i.e., Bush–privatizing Social Security, Obama–healthcare reform). The economic climate changes less for businesses when we have a divided government. It allows businesses to focus on their operations and not have to worry about dramatic policy shifts. This ultimately filters down in a positive way to the stock market.
Your THOR Team