Transcript
Hello, everybody, welcome to Friday, the S&P 500 was up a little bit over .3%. Today, and us home construction actually was up over 2.1% today, which was really great online retail and innovative technology were also in that kind of leadership position. And what we’re seeing is that the leadership is different every single day, which is sort of a classic sign of a market that’s going sideways, hard to blame it, you know, it’s trying to figure out what’s happening with the stimulus. The election is just a few days away. But I do think we’ll see some resolution and see some movement here pretty soon. But I’m gonna do something a little bit different.
Today, I’m getting a lot of questions about how the presidential election and the results of that election might impact the outcome for the stock market. And so I have a chart to show you. This chart comes from Ned Davis research, and they went back and looked at every presidential election since 1900. And what they’re showing here is the Dow Jones Industrial Average returns in the year following that presidential election. So the red dotted line would show what would happen in historically, if Trump loses the red solid line here shows what happens if Trump wins. And the black line shows what happens on average. And the blue lines don’t count in this election, because they’re for a previous democratic president. And so what you see here, first of all, is Trump loses the average rate of return is the highest on average, at 12%. And if Trump wins, it’s the second highest at 6%. So that’s good in a way in this regard.
But one of the things I find very fascinating about this is there’s a big drop here, at the beginning of the Trump loss scenario historically, in this case, the market would have dropped on average 7%. And I have heard from a lot of clients talking about how they’re worried the markets going to drop if Trump does lose. And so in historically, they’re actually right, although it might be a better buying opportunity, as you can see here, because historically, it turns around and goes up. Ned Davis was mentioning that they saw that the threat of higher taxes and higher regulations kind of scares the market. And then when things kind of normalize, it starts to move back up, again, in my opinion, is that this dip might not happen as much this year because of the pandemic and the stimulus. If there is a Biden White House and a Democratic Congress, I believe the stimulus will be higher than any other scenario that could happen.
And so that’s something to look at. If it is Biden at a Republican Congress, that dip could happen. So something to watch for. And again, maybe there’s an opportunity to buy there. But I find this very fascinating. I hope that it helps you know, some of your questions as far as that goes. The election is not very far away. And let’s see what happens next week. And I look forward to talking to you then thank you very much.