Those well-versed in the uncertainties of the stock market were probably better prepared than most for this most uncertain of presidential elections.
In the wake of an Election Day that saw states still counting votes much later — and which portended a possibly protracted legal battle either way — analysts and economists will debate how a Joe Biden victory or second term for Donald Trump might impact investors' portfolios.
As the TV talking heads might say: It’s too early to call.
“We’ve tried to caution investors to not be too short-sighted about the election,” said Roosevelt Bowman, a senior investment strategist with Bernstein Private Wealth Management. “Often we’ve seen, over the past 30 years, volatility in the market increase materially in October, and then five out of six of those times, that same stock market volatility has gone back down before the end of November. So that tells us that investors suspect big, sweeping economic changes all the time for the election, and rarely are they delivered immediately.”
Joel Stevens, Bernstein’s senior managing director for the Tampa Bay area, said that even without a Democratic Senate, a Biden White House could try to enact elements of a new tax plan that would impact clients of firms like his.
“It seems unlikely that the first move would be the entire tax agenda implemented when the economy is still in recovery mode,” he said. "You’re likely to see fiscal aid and stimulus first, and one by one, looking at different parts of the proposed tax plans.
In a conversation just before Election Day, Stevens and Bowman discussed the impacts the vote could have on investors in the near and long term. (This conversation has been edited for length and clarity.)
In the days after an election, are there market signifiers you watch more closely than you would at other times?
Bowman: I would say no. For the most part, what you’re looking at are the same indications, and marginally, you’re starting to see some clues already. Right now, the markets, broadly, are showing a fair amount of trepidation. Some investors are still thinking about 2016, in terms of Brexit and President Trump winning, where the expected result was not what happened.
Are there sectors that seem poised to grow or drop?
Bowman: Conventional wisdom says, “If a candidate’s going to enact a certain policy, these sectors have to go down.” That was the argument last election, with President Trump and health care, and we didn’t see that at all. For us, we’re much more focused on the health outlook, thinking about the pandemic. If you look at what we’ve seen so far this year, it’s mostly been focused on really large capitalization tech stocks, which feeds directly into the theme that we’re all working from home, connecting from home, using e-commerce, ordering goods, rather than going out to stores. In thinking about which sectors could benefit, it’s less about the election, and more about, do we see an improvement in the health outlook, which broadens out economic activity, which would then broaden out the number of sectors that could benefit going forward.
We’ve seen this enormous chasm between these record highs of the stock market and these unimaginable levels of unemployment. Are we living in a healthy economy?
Bowman: The economic recovery is there. It’s not complete, certainly; we’re still in recovery mode. But we have seen some improvement. In the labor market, we’re not at the highs of unemployment like we were before. We’re seeing some encouraging signs from retail sales and consumption indicators. That said, most economists would agree that more fiscal support is likely needed to push the recovery forward, to accelerate it.
As the country has gone through this extreme politicization, have you noticed any impact on how people want to invest their money?
Stevens: Absolutely. And this is an area that we’re very, very proud of, whether you want to call it values-based investing, or responsible investing, or investing with purpose. At the beginning, there was this thought that you had to sacrifice performance with your assets in order to do good, or to have that impact. It’s just not true. You’re able to, in a lot of cases, do better, because it raises the scrutiny of managements, knowing that people are really looking under the hood and kicking the tires and understanding the impact in their community.
Bowman: When you think about climate change, health care, education, they’re going to develop products and services that are innovative, that leverage technology, and are going to be groundbreaking and have the ability to potentially dominate market share. If you think about the fact that almost 30 percent of the world doesn’t have a bank account, that type of problem isn’t solved by brick-and-mortar commercial bank branches popping up all over foreign countries. It’s going to be through mobile payments, digital banking, that sort of technological advancement and innovative product set that lends to really explosive growth. It really does open up some great growth investment opportunities.
We’re only four years away from Election Day 2024. What tax and economic issues will candidates be talking about then?
Bowman: Over the last decade or so, since the last crisis, spending has gone up. Taxes are most likely going up. Something I would just say is, investors often assume and expect this kind of broad, sweeping economic change, and the U.S. rarely delivers on that. I think we’re going to be grappling with a lot of the same issues.
Stevens: You’re going to see elevated infrastructure spending over these next four years, and how does that play out? Inflation is another thing that, in those four years, looking at the economy, will be a big deal. You’ll have a technology conversation, a tax conversation, this responsible investing conversation, and those big buckets really aren’t going to change much. But what fills them certainly will change, as they do every time.
"term" - Google News
November 05, 2020 at 07:25PM
https://ift.tt/3k0kplI
After a tumultuous election, investors should keep calm, think long-term - Tampa Bay Times
"term" - Google News
https://ift.tt/35lXs52
https://ift.tt/2L1ho5r
Bagikan Berita Ini
0 Response to "After a tumultuous election, investors should keep calm, think long-term - Tampa Bay Times"
Post a Comment