Tomorrow is a big day for the American people. It is estimated that over 200m people will go to the ballots, in what is already being considered the most controversial elections in U.S. history. The outcome will be either a Republican victory, with Donald Trump heading, or a Conservative outcome meaning Hillary Clinton will win. One of these two will be the next head of state and head of government of the United States for the next four years.
From a financial markets perspective, it is still unclear what implications will arise from the 2016 election. In the preceding weeks, days and now hours, investors have been positioning themselves trying to predict the outcome and implications of this important event. “How will the election result affect my portfolio?“, an investor will surely ask himself. And most relevant right now: “what is the strategy for me right now to hedge against risk?“.
Market Performance in Election Years
Historically, the market has performed well in election years with the S&P 500 running in positive territory 82% of the time. However, this is not a normal election.
The following infographic from Fisher Investments shows the historical S&P 500 performance during U.S. election years, as well as during the terms of some specific presidents.
