The stock market is placing its money on Hillary Clinton, and it certainly hopes that traders are right. Investors view the former Secretary of State as a status quo candidate that will continue to feed Wall Street money and not rein it in at all. On the other hand, traders view Donald Trump as a potential reckless fiend that will negatively impact Wall Street with his policies.
With that being said, how do stock markets perform during United States election years?
Visual Capitalist explains:
Clinton and Trump are the two most disliked candidates in history, and third-party candidates such as Gary Johnson, Jill Stein, and Evan McMullin are polling relatively high in certain states.
Some see a Trump presidency as a guarantee for extremely volatile markets, while others see a Democrat landslide as also posing a huge market risk. Meanwhile, there are all kinds of weird hypothetical situations that could occur that would likely give traders migraines.
One of these tail risk events was highlighted by Nate Silver in early October. It involves Gary Johnson winning his home state of New Mexico (where he is polling at 24%) and at the same time neither Trump or Clinton getting enough votes to win the Electoral College. It’s unlikely, but still possible.
No matter how the results shake out, this election year will have long-lasting implications for all market participants, and it is likely that many lessons will be learned by traders.
This infographic from Visual Capitalist takes a look at stock market performances since the election of Herbert Hoover:
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