3 Simple Reasons Why For Stock Investors, It Doesn’t Matter Whether Biden or Trump Wins The Election in 2020
6 November 2020
Based on the current trend of the mail-in ballots, it seems likely that Biden is going to be the victor of the US election in 2020.
Maybe by the time you are reading this article, Biden is already projected to win in Pennsylvania or Nevada. With Nevada, being the likelier state that Biden is going to win.
Winning Nevada will give him the 6 points he needs to secure the 270 electoral votes to win.
As of the time of this writing, Trump and Biden are necks to neck in Georgia – with Trump leading by only about 0.01% with 99% of the votes counted.
And maybe Trump will even stage a comeback by winning Nevada, Pennsylvania, North Carolina, and Georgia – although it is very unlikely at this point.
Regardless, here are 3 simple reasons I feel that for intelligent stock investors, it doesn’t matter who wins the US election in 2020:
1. The Primary Reason for Most Stock Outperformance is Business Results
As humans, we are naturally interested or keen on coming out with reasons why certain things are happening to the stocks we hold.
But if we think about it, at its very essence, if a business does well over time, the stocks will likely do well over time too – isn’t it?
Microsoft has done pretty well for itself in the past 30 years, no matter who was the president – democrats or republican.
Yes, there is survivorship bias involved. But the fact remains that if the company continues to innovate and produce great results, shareholders are bound to be rewarded over time.
2. The Business Cycles And External Circumstances Play A Bigger Part
“Bull markets and bear markets come and go, and it’s more to do with business cycles than presidents.” – Siegel, author of Stocks For The Long Run
Whoever wins the presidency, I believe that what happens to the economy will never come from just one factor.
The business cycles and external factors play a bigger part.
For example, yes Trump had made corporates in America richer with the tax cuts he did in his Presidency. But the virus is beyond Trump’s control when it first came, it is within his control though – on how he should have handled it.
But regardless, the point is that how the stock market will do – and how our investments will pan out – is likely more of a factor of how we behave, that who is the president.
And if we think about it, the companies we choose and the price we pay for the stocks plays an even bigger part.
3. Whoever Wins, At Least We Know Who Wins
The stock market hates uncertainties.
They love certainty.
Whoever wins, be it, Trump or Biden, at least we know who is the next US president. And also importantly, who will be controlling the Senate and the House.
As of now, it seems like the Republicans will still control the Senate and Biden will be the President. Let’s see what happens but regardless, when there is more certainty, the market tends to do better.
Look back in March 2020 when the COVID-19 pandemic has just begun, the stock market crashed due to massive uncertainties about the impact of the virus.
Moving forward now to almost the end of the year, the pandemic is not yet under full control but because we now know more about the virus than we did back in March, the stock market has recovered all of its losses and gained further.
Yes, we can analyze the past and see how the stock market does under past presidents.
In fact, Forbes has a comprehensive article about how the stock market performed under every US president since Truman here.
In general, the stock market does better under democrats based on the past.
But the past does not equal the future.
One thing we know now is that we are on a path to recovering from the COVID-19 pandemic and with a stimulus and vaccines in sight, business’s earnings are likely going to do better (of course, depending on what we have in our portfolio).
And with little alternative to equities in the current low-interest-rate environment, the market has the appetite to take on more risks with equities.
So regardless of whether Trump or Biden wins, the stock market will likely do fine – if we invest in the right companies at the right prices.
Was this article useful for you?
If it is, appreciate it if you could take one minute to share the above article on Facebook by clicking here.
The information provided is for educational and general information purposes only and is not intended to be personalized investment or financial advice. We make no promises as to the accuracy or usefulness of the information we present.
Important: Please read our full disclaimer.
Chris Lee Susanto
More from Chris
The adage that “In the short run, the market is a voting machine but in the long run, it is a weighing machine.” by Benjamin Graham could not be more true over the past few days. As of 9 September 2020, […]
Yesterday (3 September 2020), the US market had its deepest one day decline since June. The S&P 500 and Nasdaq had their deepest declines since June 11 and for Dow, it was their biggest decline since June 26 […]
My Bet: In 2020, The Stock Market Will Not Crash Again. Yes, it is hard to predict where the stock market is heading in the short term. But my bet with regards to virus-related concern is that I do not think that we will crash again back to March-April Lows in 2020 just because of it […]
Think About How SIA Was When Times Was “Normal” Before we got into this COVID-19 mess, SIA is already not a great business to own even when times were “normal.” All of us know that the airline […]
In this article, I’d like to share eight signs of potential fraud in our stocks portfolio that we should be careful of. These are eight simple potential warning signs of bad financial reporting or early markers […]
3. As of 1H20, Most Earnings Paid Out As Dividends Based on AEM 1H20 reports, their cumulative capital allocation breakdown from 2017 to 1H2020 is as follows: Dividends – 47%, Acquisitions – 25%, Capex – 18%, Buybacks – 10%. It is interesting to note that […]
Eastman Kodak Company (NYSE: KODK) opened at $2.15 (Monday) on July 27, 2020, and closed at $33.20 (Wednesday) by 29 July 2020. That is a 1,444.19% increase over a two day period. In this article, I am going to give you some background on the Kodak company, the reason […]
Last Friday on 24 July 2020, Intel closed 16.24% down. Although I do not own any Intel stock, I was curious why it fell after releasing its Q2 2020 results. Just a while ago, I saw the news that after 15 years of partnership, Apple decided to break up with Intel and stop using its […]
1. Temasek Portfolio is Huge. Although I know that Temasek has a huge portfolio, I was surprised to see that it is around the size of Warren Buffett’s. As of 31 March 2020, the net portfolio value or NPV is at S$306 billion. So we have our own Warren Buffett in Singapore, that is […]
Who is Adam Smith? Adam Smith (1723-1790) was a philosopher and economist who was best known for authoring the book An Inquiry into the Nature and Causes of the Wealth of Nations. Wealth of Nations also happens to be one of Warren Buffett’s favourite books […]
As a value investor, as a practitioner of value investing, I am very interested in studying funds I view as an executioner of the various value investing methodologies I myself am very passionate about. In this article, I will list down some of the value investing funds in […]
There is no excerpt because this is a protected post.