There’s one thing I think we can all agree on when it comes to the 2016 presidential election: thankfully it’s almost over. As we near the end of this long, strange trip it was fascinating to hear several financial experts tackle the question, “what will the impact of this presidential election be on financial markets, investing, and long-term investment planning?” as part of the Fall Finance Forum hosted by the Reiman School of Finance at the Daniels College of Business on Friday, November 4.
Indeed, one of the only things which each and every panelist stated without equivocation is that regardless of who wins, the reduction in uncertainty that occurs post-election is good for markets. One of the panelists, Ted Weisberg (BSBA 1962), founder and president at Seaport Securities, went even further stating that “the most ideal situation for the stock market is total gridlock in Washington.”
Ric Martin, senior vice president wealth advisor at Morgan Stanley Wealth Management, eloquently underlined the state of the election when it comes to client interface: “I have clients telling me we need a preservation of capital strategy if EITHER of these candidates win!”
Martin also stated that Morgan Stanley is “cautiously optimistic” currently, that they believe the market is pretty fairly valued right now, as opposed to the 2012 presidential election when it was clearly undervalued. He said, “This election is important…at the margin, it is meaningful. Our research department is more engaged in this election than at any time previously.”
Amy Duncan, CRPC investment advisor representative at Alpine Planning Group, began her opening remarks by discussing managing emotions in times of turbulence. She said, “We’ve been in this mindset, waiting for the bottom to drop out from under this market, for years now…humans are programmed to assess risk and are much more sensitive to risk than to opportunity. We’ve been climbing this bull market for 88 months, which is incredible – the average bull market is 59 months – but it is only fifth in terms of actual returns. So you don’t perceive that you are actually growing. This election is the apex of that feeling.”
Weisberg discussed these topics from his vantage point. He placed the uncertainty and risk underlining this election’s impact into historical contexts when he stated that there have only been four times in the last 30-40 years that were true buying opportunities: the crash of 1973-1974, the crash of 1987 (which only lasted for ~24 hours), the crash of 1999-2000 and the crash of 2008-2009. He said, “the volatility at these times is just breathtaking, it is so difficult to deal with, but these were tremendous buying opportunities.”
Weisberg was also the first participant to broach the subject of the Federal Reserve, though all of the participants engaged in this discussion at one point or another. He said, “It’s all about the Fed, it is the 800-pound gorilla in the room…when quantitative easing (QE) came off the table in October of 2014 – the market hasn’t really done anything since”. He also stated that “the Fed is between a rock and a hard place, they are ‘damned if you do and damned if you don’t’ when it comes to zero interest rates…Central banks around the world are in a mess. Going to negative interest rates hasn’t had the intended effect and has caused savers to double down.”
My biggest takeaway from this lively, engaging panel may be that whoever wins the presidential election tomorrow is certain to have their work cut out for him or her!