November 3rd is finally here, marking the conclusion of the long and highly anticipated election cycle of 2020. As we await the results, we thought it would be helpful to offer a few observations that relate to possible outcomes and implications for our clients.
As 2016 demonstrated, nationwide elections have been difficult to predict. It is our belief that the current cycle has been equally unpredictable and may produce some surprising outcomes. This phenomenon has not only been seen in the United States but also in the UK, as the election results (including Brexit) have not necessarily matched expectations from the polls leading up to the vote.
We also believe that there is a good chance that it may take some time to determine the winner of the election if the results are very close. As a precedent, we are reminded of the outcome of the 2000 election with Bush v. Gore. In that case, the result from the state of Florida was so close that it required both sides to pursue remedy via the courts for a legal determination. After working through both state and federal courts, it took until December 12th to provide a legal resolution and a following concession. It would not be surprising to see the current election take some time to determine a winner. This is further complicated as a result of the unique challenges and accommodations provided by the states regarding COVID-19 as well as a high volume of mail-in ballots.
Despite the fact that it may take some time to determine political winners, we do believe that financial markets are generally aware of these possibilities and are expected to function normally while resolutions are being met. Further, we also believe that the legal system has been anticipating these challenges for several months and will be prepared as well should it be necessary.
In our recent quarterly market review, we included a recap from a number of different sources (on Page 6) as it relates to how markets perform both under Republican and Democratic administrations. We think that you will find it helpful. Whatever the outcome, we remain focused on helping our clients navigate short term volatility in the pursuit of their long-term goals. If we can be of service to you or those whom you care about most, please feel free to Contact Us.