What of a Biden Presidency?
Let’s talk about presidents, but let’s not talk politics…. please.
President Biden is the seventh president elected to serve during my career as an Investment Adviser, and the twelfth president elected to serve during my lifetime (I was born when America still “liked Ike”). Six Republicans and six Democrats. Out of those twelve presidencies, with the exception of President Bush’s second term, markets and America advanced, despite having plenty of exciting moments.
Warren Buffet is well known for saying that “Markets don’t care how smart you are”. I’d like to add to those wise words: “Markets don’t care what party the president belongs to”. Well, if they do, they don’t care much. History shows that markets almost always rally following the election of a president, Democrat or Republican.
What markets clearly care about is knowing things, and what markets don’t like is not knowing things. Financial markets are highways for capital allocation. When people see things they like and understand, they are more apt to allocate capital in securities. However, when the picture is unclear and understanding is left to chance, they avoid allocating capital, thus markets often decline in the weeks prior to elections, followed by an advance post inauguration.
Now, who our president is or which party controls Congress are all still important. Decisions are going to be made about tax rates and government spending, not to mention addressing how we fight COVID. Iowa Wealth Management will be dealing with a different set of regulators, likely not as industry friendly. But, we will deal with what comes our way, as will you.
Take solace. History tells us the only constant with markets and new presidents has been the relentless advance of the “American Way”.