With the presidential election behind us, many investors are still making assumptions on what the results could mean for the economy and future stock market returns. But history tells us that over the long run, the market does not care who is in control of the White House. Since 1926, markets have continued to rise regardless of which party holds office. When it comes to elections, the old adage applies: it’s time in the market, not timing the market. History has shown that seeing through uncertainty and taking a long-term perspective can lead to greater success.
Overall, positive news on the vaccine has reinforced our view that the cumulative economic shortfall caused by the pandemic, what matters most for financial markets, will likely be a fraction of that after the financial crisis. We continue to see stronger growth and lower real yields ahead as the vaccine-led restart accelerates and central banks limit the rise of nominal yields. Moreover, additional stimulus package(s) and increased government spending in 2021 should help bolster the economy and increase investor confidence. While there will always be some degree of uncertainty, there is a lot to be hopeful for going into the Holiday Season and heading into the New Year.
