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Investors Anticipate Market Volatility After Election Day, But Only in the Short Term

  • Nearly all investors in a recent Hartford Funds poll said they expect the U.S. presidential race to affect the stock market, though the impact is likely to be short-term
  • Investors more likely to plan changes after results of the election than before
  • Another survey highlights fears that an uncertain election result could pose a risk to the market

Nearly all investors in a recent Hartford Funds survey said they expect the upcoming presidential election in the United States to have an impact on the stock market. At the same time, financial advisors are cautioning people not to be rash in their investment decisions, saying elections often result in short-term uncertainty but have less of an effect in the long term.

Ninety-three percent of respondents in the survey said they think the election will affect the market, with 84 percent saying the election will likely affect their investment decisions. Forty-five percent said they will make changes to their portfolio before the election, and 62 percent said they would make adjustments in the 12 months after Election Day.

Advisors suggest that certain sectors may have more success depending on whether President Donald Trump or Democratic challenger Joe Biden wins the election. Historically, equity returns have been fairly consistent between Democratic and Republican administrations.

A previous survey found that there were heightened concerns about the possibility of a contested election result, with just 12 percent of respondents believing that the result will be known within two days. During the 2000 election, the Dow fell 5 percent during the first two weeks after Election Day (the winner was not declared until five weeks after votes were cast). A Wells Fargo analyst says the ongoing COVID-19 pandemic is also likely to contribute to volatility after Election Day.

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