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The big news starting Thursday’s trading session was the U.S. House of Representatives voting to impeach President Trump. We expect, and often see, global events having an impact on trading and the markets. Political implications aside, the big question for investors is how will the impeachment affect the markets. The short answer is: not really at all.
How could the markets not be affected by such news? Well starting with a historical look at impeachment and the effects on the markets we see that there hasn’t been a great effect on the markets as a result of an impeachment. When Nixon resigned (avoiding an impeachment) the markets became bearish, but as a result of the economic conditions at the time of high inflation and commodity prices. After the Clinton impeachment we saw markets bullish, once again reflective of the economic situation, and not a result of the impeachment itself. Which brings us to what is really driving the markets, the fundamentals of the economy, and the market sectors themselves such as earnings and growth.
Other factors to consider are that the markets and investors have had a long time to digest and analyze the potential for an impeachment. Given the long time horizon, the impeachment has been able to be priced into the markets. There is also a widely held belief that the Senate will acquit President Trump, which would also explain the lack of
adjustment to the markets. If investors begin to believe that the Senate could turn away from party lines, or if the impeachment proceedings drag on, there is a potential to see a loss of confidence in the markets and subsequent price adjustments.
As citizens we should have an interest in the impeachment proceedings of our President, but as investors we should be mostly agnostic. It is important to invest free of emotions, and focus on the fundamentals of the economy and individual corporations when making our investment decisions. The impeachment is a big deal, just not for the markets.
The above summary has been obtained from sources we believe to be reliable, but we cannot guarantee its accuracy or completeness. Past performance is no guarantee of future results.
The opinions in the preceding commentary are as of the date of publication and are subject to change. This material is not intended to be relied upon as a forecast or investment advice regarding a particular investment or the markets in general, nor is it intended to predict or depict performance of any investment. Investors should consult their financial advisor on the strategy best for them. Past performance is no guarantee of future results. Securities offered through Kalos Capital, Inc. and Investment Advisory Services offered through Kalos Management, Inc., both at 11525 Park Woods Circle, Alpharetta, Georgia 30005, (678) 356-1100. Fountainhead Wealth Advisors is not an affiliate or subsidiary of Kalos Capital, Inc. or Kalos Management, Inc.