Halloween has come and gone. My two witches and one Ghost Buster put in an impressive two hours of trick or treating in our neighborhood and have the candy to prove it. Yet, people are nervous. At least judging by the frequency of questions we're asked about the implications of the upcoming Presidential election, it's the two “”ghouls”” staring down November 8th that have investors more scared than in any other election of my lifetime. With less than a week to go before heading to the voting booths, here's a little data and perspective.
Election Years and the Stock Market
As you can see above, election years tend to be good for stocks on average. Additionally, anecdotal evidence tells me, like in other election years, that the government is supporting economic activity and jobs. Every day driving to work, I am detoured around roads and bridges that are under construction.
A Look at Volatility
Based on BlackRock's research, it can be expected to see increasing volatility leading up to election day. Post election looks like a mixed bag but on average volatility tapers or levels off. Given the nervous investor psychology, it is surprising to see that we were below average compared to historical volatility and only recently increased to levels near the historical average.
Are you worried about how the Presidentail election might impact the stock market and your investment portfolio? Are you doing anything different?