America Waits for the 2020 Election Results

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America Waits for the 2020 Election Results

Four years ago, we notified you that despite the polls, Donald Trump would be the next President of the United States.  We were confident because of the trends we were seeing.  At the time, we suggested some ways to make the most of that surprise.

As of this writing, the national party conventions are behind us.  Former Vice President Biden has picked his vice-presidential running mate.  President Trump and Senate Republicans have embarked on a race to quickly fill the Supreme Court vacancy created by the death of Justice Ruth Bader Ginsberg.  The country is reopening from the COVID19 pandemic while awaiting approval of a reliable vaccine.  Black Lives Matter and Antifa are routinely rioting in the streets of major cities.  Meanwhile, supercharged election year accusations and scandals emerge at an accelerating rate.

So, it’s the perfect time for investors and managers to objectively assess the upcoming election, which is just a few weeks away.

In trend #2 this month, we’ll discuss what happens if Trump is reelected and Republicans retain control of the Senate.  More importantly, we’ll look at the less likely, but quite possible scenario under which Republicans retake control of the House of Representatives.  And we’ll also tee-up some of the implications of the continuing MAGA revolution.

In trend #3, we’ll examine the realistic scenario of a Biden victory, with the Democrats maintaining control of the House of Representatives.  We’ll also consider the significant policy changes that may impact your investments and your business if Democrats gain control of the Senate, as well.  And we’ll highlight some of the implications of making the Green New Deal a reality.

To set the stage, let’s consider what the markets are telling us about the election.

The three months preceding a Presidential Election election are a crucial period.  According to “the presidential election cycle theory,” when the market rises between July 31 and October 31, the incumbent party tends to win the presidency.  And when the market slumps, the challenging party is victorious.

Look at the 2016 election as an example.  Polls strongly favored Hillary Clinton, the incumbent party’s nominee; but Mr. Market had other ideas.  The S&P 500 fell 1.7 percent in the three months leading up to Election Day, and the challenging party’s nominee, Donald Trump, won the White House.

Since World War II, this trend has had a 72 percent win rate...

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