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August 2, 2016 8:35 pm
What should you expect to happen with the stock market during election season?
Mr. Stillman's was John Stillman John here we are 26. Most contentious most unusual election year that I can recall, and I'm just wondering if you can give some advice here for the folks you may be thinking about their portfolios.
But best vote when it comes to their finances and their money. Is there any particular candidate or candidates that they should be voting for for selfish reasons. Well, it's a fascinating discussion and if you actually look at the actual data over the course of American history. There is very little empirical evidence one way or the other to suggest that conservative or liberal or Republican or Democratic candidates make any kind of tangible difference as it relates to the financial markets. Okay now I think the idea exists that in a pro-business candidates are better for the market may be right, but the fact is, if you look at how the market is behaved during Democratic presidencies and during Republican presidencies really no difference. Okay so you not giving us any advice to lean toward any one candidate or the well and so the other thing to consider is usually it's the time leading up to the election right that has the most effect on the stock market, more so than who actually gets in office because what does the market not like the market doesn't like uncertainty okay and so the market doesn't know when you'll be talk about the market like it's a person, but you know when the market doesn't know who the president is going to be. It's worried because of the uncertainty which is stupid because as we just determined it doesn't matter who's in office is not going to have a tangible effect on market so it's funny that the lead up to the election actually causes more volatility. Historically, then the results of the elections are there just seems to be so much uncertainty.
This particular election, more so than in some years past Well and that's because of the very different that this campaign is unfolded so far. I mean when I was saying earlier, you generally lean toward all right, while the pro-business candidate is going to be better for the markets who's the pro-business candidate in this campaign.
I do not know normally you would say the Republican is right well you know the casinos are bankrupt.
The hotels are really his legs put his name on the University was a scam, so is he really the pro-business candidate in many ways there's always a contentiousness between Wall Street guys and real estate guys and so you know Donald Trump is in no way a friend of the hedge funders if you will, Hillary, on the other hand, her son-in-law is a hedge fund or Chelsea used to work for a hedge fund. In no Hillary, much as been made about her talks with her talk to Goldman Sachs and the money she got paid to to give those speeches.
So from that standpoint, you might say that Hillary's the pro-business candidate on the other hand, you know how much is she going to lean toward trying to implement some of the things that Bernie Sanders talk about which you would not say are at all pro-business. So now it's fascinating. If we wanted to vote for the pro-business candidate. I don't know who it would be well I can tell you one thing, with certainty, and I'm not the expert here, but one of the candidates is definitely the pro-Trump candidate. I don't know what to throw anything else Pro wall. Maybe his dead lift will improve himself definitely pro-Trump in and not much else. Well it's interesting because everybody gets all worked up about. You know we have to vote this way. I mean honestly, I thought leading into that the 2012 election. I really thought that if Obama got reelected that it was going to have an adverse effect on the market. I did not think the market wasn't like that. Basically, the market just kind of shrugged said no big deal though I didn't like it.
It truly doesn't matter in the grand scheme of things as far as Wall Street goes, I would caution you from bending over backwards to try to make any decisions based on what happens with the election.
All of that said, what you really need to have in place is a plan that allows you to be fine no matter who gets elected in a matter who's in the office because at the end of the day you have to be sure that macro economic conditions are affecting your own personal portfolio insulin to give you an example that few weeks ago when the bricks it thing happened that a client will couple clients who called me up and that day, I think that was a Thursday night that the bricks at vote took place sleep so you and so on Friday they were call and say luck is something we need to worry about. Obviously, that the market took a big hit on Friday after the vote in it with one of my somewhat. Let's look at your plant because we had a very well thought out, well defined plan in place for this and let's look at your plan. Her husband was retiring. In fact, he actually just retired last week. That's why she was worried.
You know he's about to retire his paycheck going away doing to worry about all this market upheaval because of the bricks and so when we actually looked at it we symbol. Let's remember why we set up things we set up when he retires he's going to have his pension state employee pretty decent pension is a well compensated state employee for like 35 years.
Okay, pretty strong pension. She also had a pension. She's already retired has already been taking her pension and we are going to turn on Social Security for one of Gattaca in a couple years we were going turn on Social Security for the other person. We also had a couple thousand dollars that month before we put into an annuity that was going to grow in deferring that was going turn on the thing in the year seven of their retirement like that. The way it all panned out. Of the 1 million maybe 1.2 million that they have left in the market. They did need a penny of that for 11 years. So you see how counterproductive it is to worry about what's going on the market today.
If you have a plan set up like that sounds like a great plan. Set up with her. The problem is, a lot of people don't have that plan. A lot of people don't have a way of separating their income from what's going on the market their investments. And so if you're trying to take income from this fluctuating source will sure you have a problem you don't want whatever happens in the political world down effect on the market and that have an effect on your retirement income. That's what you need to have an income plant which is separate from your investment plan will just have to wait and see if Orange Hitler gets Alexis to have us give you is that we went there and told us what to do anyway. We don't know he has. It's just that it changes everything. Well yeah but they're all these grandiose statements. I might have to explain that word to him what it means, but they're all these grandiose statements it makes but he doesn't say how is good right so I don't know that there is a winning option anywhere you look injected my opinion. Am sorry again you want to be sure that you have things set up in such a way that it truly doesn't affect you what goes on. The other thing that's interesting to note is that you, as I said usually once the election is done. We no longer have uncertainty, you then the market usually stabilizes. Interestingly leading up to the election as there is more certainty built into it as to what's going to happen. The market actually stabilizes little bit. So what say that one candidate is pulling significantly higher than the other. That's actually historically going to be good for the market… Funny how it really has nothing to do with the candidate. It's all about knowing what's going happen and then once you know it's kind like maybe this is a terrible example… But suppose that you have some kind of disease and you're going to the doctor. You know that you're about to get diagnosed with something you just don't know what it is and then the doctor tells you what is and it's almost like this relief of okay will now I know what I'm dealing with. What's my next step and it's almost like the market behaves the same way with presidential candidates. There is this worry and fear leading up to write what disease are we going to get diagnosed with here but then once you know you say all right, let's move forward… I just have to deal with one of them and not all. Well that's Mr. Stillman's opus, Russia