As we look ahead to the potential rematch between President Joe Biden and former President Donald Trump in the 2024 election, many investors are wondering how this political uncertainty may impact the stock market. Historically, election years can be tumultuous for the market, but this year seems to be defying expectations.
According to David Woo, CEO of research firm Unbound, 2024 is shaping up to be the best-performing year for the S&P 500 in an election year since 1980, with a 12% increase so far. Despite the heated political climate, the market is not necessarily trading with the election in mind, leading to speculation on what the future may hold for investors.
Looking beyond the domestic issues typically at the forefront of presidential elections, Woo suggests that the focus may shift to international issues in the upcoming race. Both candidates are expected to inherit a budget deficit of $1 trillion, indicating that fiscal policy may not vary significantly between administrations. However, the candidates’ stance on foreign policy could be a crucial differentiator, particularly in areas such as defense and energy stocks.
Defensive stocks may see a boost under a Biden administration, while emerging markets could fare better under a Trump presidency. Trump’s more transactional approach to foreign policy may signal changes in trade agreements, impacting certain sectors. On the other hand, energy stocks may react differently than expected, as historical trends have shown surprising outcomes under different administrations.
Despite the uncertainties surrounding the election, historical data suggests that market performance in the medium to long term is minimally impacted by political outcomes. While delays in verifying election results can lead to short-term market volatility, financial advisors recommend maintaining a long-term investment strategy to weather any political storms.
Ultimately, as investors navigate the political landscape, the key is to stay focused on long-term goals and avoid making hasty decisions based on political outcomes. By staying disciplined and avoiding knee-jerk reactions to election results, investors can position themselves for success regardless of who sits in the White House. Stay tuned for more insights and analysis on market trends and political developments at Extreme Investor Network.