Here's what investors should know about election uncertainty
Yahoo Finance Video
Updated
Peter Siris , Reform Elections Now Director of Research, joins Yahoo Finance’s Kristin Myers to break down what investors need to know about election uncertainty as we move closer to November.
Video Transcript
KRISTIN MYERS: Peter, I want to start with how likely it is that we are going to have a contested election. A lot of investors have been saying that that was the base case. We just heard Brian saying he is not necessarily so sure. What are your thoughts?
PETER SIRIS: I'm not saying that we're going to have a contested election. I think that it's-- that you could easily end up with one candidate or the other winning. Our point is that-- and differing from what Brian said, we think there is a possibility of a contested election with one, with two, three, four, or five, even five people assuming the presidency.
And if that happens, then we think that could be something for the stock market to look at. Brian is correct. The stock market does not usually-- is not usually influenced by politics. If you look at all the contested elections in our history, you've had a couple where the stock market was down 10%, like in 1876 with Hayes-Tilden. It dropped during the Bush-Gore contested election. Having said that, we think there's a possibility for more serious contesting of this election because of some issues with the election rules that concern us.
KRISTIN MYERS: All right, so, Peter, there's so many things to get to--
PETER SIRIS: OK.
KRISTIN MYERS: --with you. I want to start with that worst-case selection scenario that you had mentioned with five people--
PETER SIRIS: Right.
KRISTIN MYERS: --as many as five people laying claim to the presidency. Now, they include the usual suspects, right, Donald Trump, Joe Biden, Kamala Harris, Mike Pence.
PETER SIRIS: No.
KRISTIN MYERS: Now, [INAUDIBLE]
PETER SIRIS: Kamala's not one of the five.
KRISTIN MYERS: Oh, I'm sorry. I must have been reading that wrong.
PETER SIRIS: No, my five--
KRISTIN MYERS: But what--
PETER SIRIS: My five are Biden, Trump, Pelosi, Pence, and George W. Bush.
KRISTIN MYERS: And George Bush, yes, which I did not expect. The others made sense to me, not George W. Bush. How does that even work? And has your case at all changed ever since the president was diagnosed with coronavirus?
PETER SIRIS: Well, I mean, to some small degree of change, because temper-- at this point, you see Biden slightly increasing his lead in the polls. So if you were to ask me today, I'd say, gee, it's more likely that Biden wins. Having said that, I've seen polls in-- I would say we're a nonpartisan organization, but I predicted at the time of the Iowa caucuses in 2016 that Trump would defeat Hillary. And a lot of things can happen in American politics. So I'm not just saying Trump's in the hospital for a couple of days, Biden's increased his lead, the election's over.
KRISTIN MYERS: I'm still wondering how George W. Bush can [INAUDIBLE] and just snag the White House.
PETER SIRIS: I can explain that very quickly, OK?
KRISTIN MYERS: Go for it. I would love to hear it.
PETER SIRIS: OK, so you have the election between Trump and Biden. And then the problem-- and here's where I differ with what Brian said. This is not something that I'm making up. This is not in my imagination. You have very specific dates when ballots have to be counted and when the electoral colleges in each state have to vote.
Now, in the New York 14th District, it took six weeks to count the primary ballots. And in the final election, you have six times the turnout. 6 times 6 is 36. 36 weeks, you know, is-- 36 weeks is almost six months. So the point that I'm making is this, you have one month and one week to count all the ballots.
And many states, like Pennsylvania, Wisconsin, Michigan, are giving an extra two weeks for the ballots to get in. That means you have less than a month to count the ballots. If with the surge in mail-in ballots-- and these states are going from 3% mail-ins to 50% mail-ins, with the surge of mail-in ballots, many of these states won't have gotten their ballots counted, OK? So then it goes to the state legislatures. And it is reasonable that in some states, because the counting is still going on--
KRISTIN MYERS: Right.
PETER SIRIS: --the Republican state legislatures in Wisconsin, Michigan, Pennsylvania, North Carolina would vote for a Trump slate. And those same state governors in those states who are Democrats would vote for a Biden slate. Then it goes to the Congress, OK? So you have competing slates going to the Congress. Are you with me so far?
KRISTIN MYERS: A little-- a little bit. This is so much more complicated than I had originally expected.
PETER SIRIS: I apologize. I apologize it's complicated. So you have two competing sets of electoral delegates from four states going to Congress to see who's approved. And those four states have the balance between winning and losing. What happens when it gets to the Congress is everybody knows that the Republicans control the Senate, and even if many Senate seats are disputed, the governors have a right to appoint temporary senators, the Republicans will stay in control of the Senate, at least until the election is over. What people don't realize is the Republicans are also in control of the House.
KRISTIN MYERS: Right.
PETER SIRIS: Because in the House in the vote for president, each state gets one vote. North Dakota has the same number of votes as California. South Dakota has the same number of votes as Florida. So the Republicans have control of the House. And Nancy Pelosi, to avoid this, the Democrats refuse to vote. A couple of states are still in dispute.
KRISTIN MYERS: Right.
PETER SIRIS: And the House doesn't appoint a president.
KRISTIN MYERS: So Peter, because this is a-- I feel like this has gotten very deep in the weeds, and so for anyone who wants to read more on that argument, we actually have an article coming out on YahooFinance.com that everyone can quickly read, and hopefully get a better sense, because I am still a little bit confused. So I want to move on to quickly ask you, before I run out of time--
PETER SIRIS: Can I get [INAUDIBLE]
KRISTIN MYERS: I'm wondering what states are the states to watch in this election.
PETER SIRIS: OK, so that's really simple. On Tuesday night-- and incidentally just quickly, George W. Bush gets elected by something called the 20th Amendment to the Constitution. You can read what that is. On Tuesday night of Election Day, a lot of states are going to be reporting Trump with a huge lead because the Biden voters all voted by mail.
There are three states, Florida, North Carolina, and Arizona that are swing states that start counting early and do not allow ballots to arrive late. Florida starts 22 days ahead of time. Arizona and North Carolina start two weeks ahead of time.
What that basically means is Florida, which has had problems in the past, Florida's going to be basically three to four weeks ahead of anybody else. And so you watch what Florida has to say, Arizona has to say, and North Carolina has to say. If those states break for Biden, Biden wins. If those states break for Trump, Trump probably wins. If those states are close, god help us.
KRISTIN MYERS: I'm going to let that be your last words, Peter. Thank you so much for joining us today. Peter Siris, Reform Elections Now Director of Research.
PETER SIRIS: Sorry for being so complicated, but the problem is this is a complicated subject.
KRISTIN MYERS: And like I said, everyone will be able to read all about it on YahooFinance.com. Thanks so much, Peter.
