So what’s an investor to do?

Hang On

Isn’t that what you tell clients? Do you really want to:

a) predict who will be president?

b) encourage unreasonable jubilation or panic?

I know one advisor, for instance, who said, “If Donald Trump wins, we should all go to cash,” because of his proposal to renegotiate the value of Treasury bills. She was only partially joking; such an action would have hugely negative global repercussions. For that reason, though, its likelihood is extremely low.

Some Republican diehards may state that a Clinton victory would make them trade their stocks for gold bars. To that point, here’s a quote from Warren Buffett, that very, very successful investor: “I have no views as to where [gold] will be, but the one thing I can tell you is it won't do anything between now and then except look at you. Whereas, you know, Coca-Cola (NYSE:KO) will be making money, and I think Wells Fargo (NYSE:WFC) will be making a lot of money and there will be a lot— and it's a lot—it's a lot better to have a goose that keeps laying eggs than a goose that just sits there and eats insurance and storage and a few things like that."

Plentiful statistics are available to prove—or disprove—that one party or another is good for financial markets. Many pundits have already shared their thoughts on which candidate would be best for the stock market.

There are other intangibles that may bear some discussion as well. There are some important uncertainties to discuss with clients.

Crucial Distinctions

Like all situations that give clients misgivings, an election is a teachable moment to share with clients. For one thing, uncertainty’s dampening effect on asset prices quickly dissipates once the uncertainty is resolved—and the political uncertainty we face over the election will be resolved on November 9.

And yes, the candidates’ economic priorities are quite different. So are the choices that Congress will make, depending on who holds power.

Take, for instance, the Department of Labor’s fiduciary rule, to which President Obama has given priority: Under a Trump Administration and a Republican Congress, it could well go away. The Dodd-Frank financial laws, put in place after the financial crash of 2008, could be significantly loosened as well. Under a Clinton Administration and a Democratic Congress, though, Dodd-Frank could well be tightened. And the movement to raise the minimum wage, already gaining momentum in more liberal areas, could pick up steam, with both bad results (costlier payrolls) and good ones (a more prosperous middle class with more money to spend).

What Really Counts

Today, though, our economy and asset markets respond to much more than domestic politics. We are part of a complex and interdependent global economy, and the world economy has as much bearing on our markets from week to week as the jobs report.