Wall Street had a rather calm summer. Will volatility increase before and after Election Day?
So far, the market is performing roughly in line with historical patterns. In 19 of the prior 22 presidential election years, Standard & Poor's 500-stock index advanced from June through October. The median gain for the index during that five-month period: 4.1%.
During those 22 election years, the S&P averaged a gain of 1.5% in June, 1.9% in July and 3.0% in August. This year, the S&P rose 0.1% in June and rallied 3.6% in July. It was up ever so slightly for the month of August, a gain that represented its sixth straight monthly advance. Everything's good—so far.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
In past election years, July and August have been the most volatile months. The yearly standard deviation for the S&P averaged 18.6% during the past 22 election years, but volatility averaged 28.8% in July and 30.3% in August of those 22 years. July and August were relatively calm this election year, but September not so much.
Whoever wins the election, the status quo will likely remain on Capitol Hill. As a Morgan Stanley report commented in July, "Current evidence suggests the U.S. elections in November won't yield outcomes that substantially change market fundamentals." Morgan Stanley analysts foresee Clinton winning the election and Republicans retaining their majority in the House of Representatives. In that scenario, Clinton wins, but her administration has difficulty enacting any of its planned reforms.
The Smart Money
If the Republicans lose control of the House, the Democrats win the Senate or Trump wins, Wall Street could see some pronounced short-term volatility, which is also an outcome that could possibly affect market fundamentals. Possibly. But frankly, none of the aforementioned outcomes is considered likely at this point by the general consensus also known as the market. Even if one candidate or the other wins by a landslide, their most ambitious proposals may never get off the ground. As Morgan Stanley asserts, "attempts by Clinton or Trump to exercise transformative power domestically will be stunted" by a lack of support in Congress.
Should stocks rollercoaster before or after Election Day, keep calm. Any disturbance may be short-term, and your investing and retirement saving effort is decidedly long-term. The election is a big event, but earnings, central bank monetary policy and macroeconomic factors may have a much bigger impact on the markets this fall.
Greg O'Donnell's mission over the course of three decades has been to guide people to pursue and maintain a healthy financial life plan that accomplishes their goals.
Investment advice offered through O'Donnell Financial Services, LLC, a Registered Investment Adviser. Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory assets may be custodied at TD Ameritrade. Insurance Services offered Gregory C. O'Donnell, CA Insurance #0B87978. Mortgage Services are provided through American Pacific Mortgage Corporation, licensed by the California Bureau of Real Estate #01215943, NMLS #1850. Gregory C. O'Donnell licensed by the California Bureau of Real Estate #00971579, NMLS #298004. O'Donnell Financial Group Inc. and O'Donnell Financial Services, LLC are not affiliated with Securities America, TD Ameritrade, or American Pacific Mortgage Corporation. Registered to offer securities in: AR, AZ, CA, FL, HI, MO, NC, NV, NY, OR, TN, TX and WA.
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment<.
-
3 Ways to Stream The Masters and Save MoneyIf you plan to stream The Masters and are looking for ways to save, we'll show you several options.
-
Stock Market Today: Tariff Talks Drive Another Up-and-Down DayTrade war negotiations are happening, but the "fear gauge" is gyrating, and investors, traders and speculators are still searching for signs of a bottom.
-
Little-Known Ways to Guard Your Retirement IncomeIs your retirement income safe if stocks continue to plummet? Most retirees don't know these reliable options to limit their market exposure.
-
Three Warning Signs Your Investments Are (Needlessly) Too RiskyAll investments come with risk, but the secret is to take only enough risk to get you to your specific savings goals — and no more than that.
-
His Employees Don't Work 'For' Him, But 'With' HimWhile it might not seem that way, there are indeed employers out there who value the relationships they have with their employees. Here's an example.
-
Reduce Your Retirement Tax Risk With the Three-Bucket StrategySplitting retirement funds into three buckets with distinct tax treatments can help you avoid a nasty tax bill down the line. Here's how the strategy works.
-
Financial Fact vs Fiction: This Roth Conversion Myth Could Cost YouWhile some 'golden rules' stay in style forever, the financial landscape is constantly evolving. Here are five common myths to revisit (with more on the way).
-
Give Now or Leave an Inheritance? How to Balance the OptionsYou've saved enough money for retirement. But can you afford to give some to family or good causes — and when is best? These are the key points to consider.
-
How to Age-Proof Your Retirement PlanLongevity risk is a big threat to your retirement, but there are several strategies to protect yourself from running out of money, no matter how long you live.
-
Retirement Planning for Couples With a Generation GapDo you and your partner have different retirement timelines and attitudes to saving? It is possible to make plans together. This is how one couple did it.
