What the election means for your portfolio

While elections are important to any functioning democracy, to investment professionals, elections are primarily significant due to their effect on portfolios. In particular, investors must understand – and anticipate – the correlation between the outcomes of the election and the markets, if any. Red, Blue or Purple – Does It Matter Who Wins? It is true that politics can be deeply personal, especially because the issues addressed by both parties extend well beyond capital markets. Additionally, elected officials can enact policies that, for the long term, may impact markets and market returns. However, despite these facts, it seems investors place far too much onus on market returns and their connections with presidential election results. First, consider the presidency in terms of the markets and the importance of the executive branch. While it is the highest office in the land, the president is not a solo act. The U.S. and global economies act outside of the U.S. president’s control, and the president by design is often forced to work with the legislative branch to enact substantive polices that may have long-term economic impact. Therefore, keeping this in mind, simply looking at political party based on presidency is too narrow as a

October 29, 2020 No Comments

Markets react to a Trump surprise

Azzad Special Election Comment Early this morning, Dow futures dropped 750 points in the wake of Donald Trump’s electoral victory. In fact, the news sent a shock wave through global markets, with most selling off over fears of what a Trump win means for the status quo. Although the U.S. stock market has posted gains as of this writing, investors are still left with a sense of unease. A look back at history offers an important lesson: stock market moves over the 24 hours following an election predict the market’s direction over the next 12 months less than half the time. With Trump about to assume office, keep in mind this interesting comparison showing the relationship between the U.S. government’s composition and market performance. Between 1926 and 2015, when both houses of Congress and the White House were controlled by the same party — as they will be in January 2017 — both the S&P 500 and a diversified 60/40 stock/bond portfolio averaged the highest returns.* The next highest returns came when government was “partially divided,” with the House and Senate controlled by the same party, but the White House held by a different party. The “completely divided” scenario, which occurred

November 9, 2016 No Comments

Election 2016 commentary: How markets may fare in a Trump administration

Note: At Azzad, we do not position our portfolios in anticipation of any singular event. Rather, we focus on factors that we believe allow our clients to increase their chances for a positive investment outcome across all market environments over the long term. For more detail, watch Azzad’s video on the pitfalls of a short-term investing focus. Markets detest uncertainty. As America approaches the eighth year of an economic expansion, any event that might upset the apple cart can take on outsized importance. The status quo, which Hillary Clinton largely represents, has been a boon to stocks over the last several years. But a Donald Trump victory would qualify as a break from business as usual. What would that mean for your portfolio? Let’s break down the 2016 race to the White House and outline a few possibilities. How would Trump impact the economy? It’s true that politics and economics are intertwined and presidents can impact a country’s economic growth, but there are limits to that influence. Trump has promised to boost U.S. GDP immediately to 4-5%, but there are far too many complexities for a single person to have that much positive impact. The opposite, however, might not hold

November 2, 2016 No Comments