My middle son asked the question, “What will the stock market do after the election”? I have to admit I do not have a clear indication what it may do. Frankly I don’t think the markets have had a clear plan for decades for after election directions.
The last one that I can think of was when Reagan defeated Carter. In my recollection most if not all defense contractors had a heathy bump up in stock prices. The Iranians held our citizens as hostages. Our military attempt to free them ended in disaster. But Reagan ran on the platform that a strong US resurgence of military might would come.
I have read that during the typical presidential cycle, the market has ebbed and flowed with the four-year election cycle for the past 182 years. With wars, bear markets and recessions tending to start in the first two years of a president’s term, according to The Stock Trader’s Almanac; bull markets and prosperous times mark the latter half.
Since 1833, the Dow Jones industrial average has gained an average of 10.4% in the year before a presidential election, and nearly 6%, on average, in the election year. By contrast, the first and second years of a president’s term see average gains of 2.5% and 4.2%, respectively. A notable recent exception to decent election-year returns: 2008, when the Dow sank nearly 34%.
If this holds true, we are looks at lackluster growth in 2017 or worse.
Frankly to my mind, both candidates are awful for small businesses, but then I can’t remember a President or presidential candidate that was a strong supporter of small businesses.
So all we can do at this point is wait, pray and see what occurs.