Another Reason To Be Thankful
If there is one thing that the market hates, it’s uncertainty – and traders have certainly received an abundance of it over the last month. October was “one for the record books” as wild price swings and volatility increased to levels not seen in years. While there have been many causes for concern – from trade negotiations to Federal Reserve guidance – one of the major pieces of uncertainty came from the midterm elections.
The political climate in the U.S. has been tumultuous over the last few years and the midterm elections quickly became a focal point. Aside from the social implications, investors worried about just what could happen to the various policies that have helped spur the market higher over the last few years. These factors made for a bumpy ride on the investment roller coaster.
The outcome couldn’t have been better for investors when you consider historical data. With the election results now in, much of the uncertainty is gone and that means we can plan for the months ahead. While Democrats flipped the House of Representatives, Republicans retained control of the Senate. This spilt of the two Chambers of Congress will only create more gridlock. Democrats now have a real check on Trump’s future agenda. Fears about mega-sized changes in policy points were certainly justified; however, removing many of the policies already in place will be very difficult given the Republican control of the Senate.
Consider this MarketWatch chart showing the average annual returns with a Republican President and a split Congress.
By taking advantage of this gridlock, investors could see some higher returns in the years ahead.