With the mid-term elections one week away, many of Alex and Ed's clients and podcast listeners are wondering how the markets will be affected by the results on November 8th.
Alex did some digging into this, looking at the every President since Kennedy, comparing market returns of the first two years of their term to the total length of the term. We start the podcast by digging in to those numbers, in search of some historical data. The bottom line is that the numbers do not provide us with a tradeable strategy. And the same is true with divided government - either when Congress is split, or when it's controlled by one party with the other party occupying the White House. Divided government may show slightly better returns. However, stepping out of the market during times of unified government could keep you on the sidelines, missing out on market gains.
In the second half of today's episode, Ed looks to the future, and what market analysts are saying about the 2022 election. Most are predicting divided government over Biden's next two years, with the Republicans likely to take the House, and Senate being a virtual tossup. With divided government, any major legislation is unlikely to pass. And even if the Democrats control the White House, Senate, and House, fears of inflation on both sides of the aisle may make major bills unlikely to pass. Many bills are passed with the spending up front and revenue coming in later, which would only add to inflation.
Keep in mind, Jay Powell and the Federal Reserve are not affected by midterm election results. It will be up to them to act to try and curb inflation while avoiding recession - a tough line to walk as we've discussed in previous episodes.
The bottom line is this - Americans have a number of factors sending them to the polls on November 8th. But fear of economic chaos should not be one of them.
Have questions about your financial future? Alex and Ed are always happy to have a conversation, whether you're a client or not.
You can always email them at info@birchrunfinancial.com or give them a call at 484-395-2190.
Or visit them on the web at https://birchrunfinancial.com/
Alex and Ed's Book: Mastering The Money Mind: https://www.amazon.com/Mastering-Money-Mind-Thinking-Personal/dp/1544530536
You can always email Alex and Ed at info@birchrunfinancial.com or give them a call at 484-395-2190.
Or visit them on the web at https://www.birchrunfinancial.com/
Alex and Ed's Book: Mastering The Money Mind: https://www.amazon.com/Mastering-Money-Mind-Thinking-Personal/dp/1544530536
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