Hennion & Walsh CIO Kevin Mahn joins Market Domination to give insight into why markets have yet to truly price in the election season.
"I believe the market is more focused right now on when that first interest rate cut is going to take hold. And if, in fact, this economic slowdown is going to dip into a recessionary territory. If markets are actually pricing in what's happened historically, remember that political parties have an impact on certain areas of the market, but generally not the market as a whole. In fact, history tells us that a divided government generally bodes best for stock market performance. That's because no major new rules or legislation or regulations get passed," Mahn says.
For more expert insight and the latest market action, click here to watch this full episode of Market Domination.
This post was written by Nicholas Jacobino
I want to leave you, um, on this, which is an election question, which I'm sure you know, we're going to be talking about this for the next, you know, several months if not longer. Um, obviously there's a lot of debate right now about whether President Biden should step aside as the Democratic candidate.
There hasn't been really any market reaction to that debate. Um, what do you think the reason is for that? And when do you think we might start to see some of that being felt more?
I believe the market is more focused right now on when that first interest rate cut is going to take hold and if in fact this economic slowdown is going to dip into a recessionary territory. If markets are actually pricing in what's happened historically, remember that political parties have an impact on certain areas of the market, but generally not the market as a whole. In fact, history tells us that a divided government generally bodes best for stock market performance. That's because no major new rules or legislation or regulations get passed. I think that's what markets believe is going to happen coming out of this particular election as well. What we're talking to our clients about is build your portfolio consistent with the opportunities that we believe are in the economy right now. And once we know the outcomes of that election, then you could overweight or underweight certain sectors based upon the policies of those that are in power at that point in time. But don't let it sway all your decisions. Don't sit on the sidelines waiting for the outcome of the, the political elections because we know that trying to time the market is an exercise in futility. And if you look back to 1990, if you just missed out on the 10 best days in the market, your returns would have been cut in half. I don't know when those 10 best days are, you don't know when those best 10 days are. But I can assure you if you're not in the market on those 10 days, you're not going to participate.
I mean, look at the election in 2016, the market reaction that then was reversed so.
That was reversed afterwards. Yeah.
You never know. All right. Thanks a lot. Appreciate it. Good to see you, Kevin.
My pleasure. Good to see you too.
