Now that the presidential battle lines have been clearly drawn, with Donald Trump running on the Republican ticket and Hillary Clinton running on the Democratic line, Wall Street has reacted with…nothing much. The day after the announcement that Clinton had clinched her party’s nomination, the S&P closed up 2.72 points. Yawn!

And since Trump became the Republicans’ presumptive nominee in early May, the markets have moved about 3 percent, a rally that’s concurrent with the Federal Reserve’s retreat from its declaration that it would raise interest rates very soon.

Can portfolios have politics? They can’t avoid it. Elections mean change and uncertainty—usually a bad thing for the stock market—and investments have to weather the emotional burden, which drags down returns. And an election like the one we’re facing now, with its deeply felt partisanship and anger, is the worst kind.

Take a look, for instance, at this chart, first published in The Wall Street Journal, which compares investment returns during elections of incumbent presidents (called re-election years) to investment returns with no incumbent (called open-election years):

The uncertainty is certainly a damper on market performance. In addition, according to research by the Federal Reserve Bank of Philadelphia, the more partisan the general political environment, the more of a damper it places on growth—so much so that they created a Partisan Conflict Index that compares stock market performance to the level of political agreement as reported in a list of newspapers (the index counts the frequency of articles, not their tone). According to a paper by Marie Azzimonti, the economist whose research was the basis for the index, “a 10 percent increase in the partisan conflict index is associated with a 3.4 percent decline in aggregate private investment in the U.S.”

First « 1 2 3 » Next