Another four years have flown by, and here we are again, Another US election has been decided and Donald Trump has secured a historic win. He is only the second president to win back the White House after losing a presidential record, the last time was in 1892.

The U.S. president is often considered one of the world’s most powerful figures, wielding substantial influence over the world’s largest economy and quite probably its most formidable military, albeit limited by a system of checks and balances through Congress. Perhaps it is understandable that the media, politicians, celebrities and business owners alike wish to make their voice heard during campaign season… it is noisy time of year!

Former President Donald Trump has secured a second term for the Republicans, and looks likely to also win the popular vote, a feat he didn’t even achieve in 2016. The outgoing Vice President Kamala Harris’ hopes to make history as the first female president have been dashed.

It has been a roller coaster, what with President Biden’s withdrawal from the race, two failed assassination attempts, Elon Musk coming in to bat for Trump and Taylor Swift for Harris, and the usual fierce partisanship from both sides.

For investors, it is natural at times of political uncertainty to wonder whether they ought to act, perhaps altering their portfolio, or to move money into cash deposits until things ‘settle down’. Some choose to invest this way, mostly at their peril, as very few managers possess the ability to consistently predict such events[1].

A better strategy, as is adopted in our client’s portfolios, is to outsource this guesswork to the market itself, relying on the millions of daily participants to come up with their expectations and reflect them in prices. Thankfully, given both democrats and republicans support capitalism and believe in personal freedom and property rights, this strategy is a tried and tested approach to investing.

The chart below shows the global equity market return over the last century or so, where the colours represent whether the sitting US president was Republican (red) or Democratic (blue) at the time. There is little to draw from the red and blue sections, both parties have presided over some fantastic periods, and some not so fantastic ones. However, the ability of capitalism to create wealth despite the ups and downs is evident, with $1 invested in 1926 becoming nearly $10,000 by 2024.

Figure 1: Democratic (blue) and Republican (red) Presidents and equity market returns

The challenge is that it is not enough to know what the outcome of this election will be, one also needs to know – without the benefit of hindsight – how the market will react once the event occurs. Will a Trump victory be good or bad for markets? Answering these questions is akin to guesswork, especially given Trump’s track record of unpredictability, despite what some of the financial press might have us believe.

Whilst guessing against randomness is impossible, taking on the known risk that equity returns are far less certain than holding cash rewards investors who ignore this short-term noise and focus on the long-term.  The choice of the US President is important to some, but to the long-term investor it is largely irrelevant.

“He who lives by the crystal ball will eat shattered glass.”

– Ray Dalio, CIO of Bridgewater Associates

Risk Warnings

This article is distributed for educational purposes for UK residents. It should not be considered investment advice, an offer of any security for sale nor a recommendation of any particular security, strategy, platform or investment product. This article contains the opinions of the author but not necessarily the Firm. Information contained herein has been obtained from sources believed to be reliable but is not guaranteed.

Past performance is not indicative of future results and no representation is made that the stated results will be replicated.

[1] Albion GAME^TM 24.5 – 90% of US equity fund managers were beaten by the MSCI USA IMI Index 20Y to Jun-24.

[2] https://smartersuccess.net/indices

This article was published in August 2024 There is no denying it, the US market has done very well as of late. However, a look behind the headline figures shows us things aren’t so simple. It can be seen that much of the US market’s strong returns can largely be explained by just a handful

In October 2023, I attended my last conference as Chair of the Global Association of Independent Advisors (GAIA) in Stockholm. It is always great to meet with the leaders of likeminded firms across the globe and find out what they are doing to improve their service to clients. This year’s overarching theme was about technology

This article was published in June 2023 These aphorisms highlight a simple but important truth that is more relevant and profound today than ever: “Facts are stubborn things, but statistics are pliable.” “Statistics do not speak for themselves.” These days the sheer abundance of data and information available to us can be dizzying and overwhelming.

This article was published in April 2023 The below is an abridged version of a ‘BpH insight’ we produced for our clients. Send us an email here if you would like to read the full version. Each year, investors face a barrage of commentary and speculation from the financial press about which stock, sector or

After over a decade of reasonably stable inflation, it has once again shot back into the headlines. Not only are prices increasing across the board, but essentials like essentials like food, fuel and energy are experiencing some of the biggest increases, hurting the bottom line of many households. The treasury’s decision to freeze personal tax

The story of Ignaz Semmelweis is both a marvel and a tragedy. His work was a crucial step in forming the modern theory of disease, saving countless lives. However, at the time, his findings barely made a ripple in the medical world. Many lives which could have been saved were condemned by the seemingly voluntary

What influences our perspective on risk? In finance, risk is often determined by calculations based on historical data and empirical observations. However, the way risks are manifested in our heads is far different from how a computer will interpret them. If you have ever been fortunate enough to swim in oceans around the Caribbean or

In this series of short videos, Simon Brown, partner and Chartered Financial Planner, explains what all investors should know to become successful. This includes the risks, behaviours and opportunities that are important to take into account when investing.

Who could have anticipated how markets behaved in the last year? It’s a question that comes up time and time again in the world of investing. Today is no different. Who would have predicted a pandemic would cause one of the sharpest equity market declines in recorded history? Who would then have been brave enough

This article was published in February 2021 Do investors need to take note? Early into the new year, the share price of GameStop began to edge upwards. The brick-and-mortar video game retailer was widely thought to be a relic of a former age. However, it had caught the attention of millions retail investors using Robinhood

Published on January 2021 Albert Einstein’s wisdom didn’t stop at physics. In a lesser-known quote he called compound interest the ‘eighth wonder of the world’. For those that understand compounding, the reason why is obvious. However, we can’t all be Einstein. Compounding is difficult for most of us humans to wrap our head around intuitively.

30/10/2020 In the headlines, the news looks bad, but this is precisely the eventuality that a sensible investor should be prepared for. At BpH Wealth we follow the evidence, which suggests that relying on dividends in your portfolio has never been a good strategy, this is just the most recent example of why. In times