Election 2016 in Perspective

Transcription

1 Election 2016 in Perspective Everything Investors Need to Know and Should Ignore about the Upcoming Election Aaron Boehm President COPIA Wealth Management Louis Bennett Financial Consultant COPIA Wealth Management Thursday, October 20, 2016 Shares of Oppenheimer funds are not deposits or obligations of any bank, are not guaranteed by any bank, are not insured by the FDIC or any other agency and involve investment risks, including the possible loss of the principal amount invested. *Securities offered through KMS Financial Services, Inc. Member FINRA/SIPC Oppenheimer funds are distributed by OppenheimerFunds Distributor, Inc., 225 Liberty Street, New York, NY OppenheimerFunds Distributor, Inc. All rights reserved.

2 Overview 1. Clearing a Common Misperception off the Table 2. One Caveat and Two Predictions 3. Six Truths about Washington Regardless of Who Wins 4. Issues that Could Be Affected by the Election s Outcome 5. Election 2016 Our Biggest Conclusions 2

3 A Proper Perspective Well-positioned, well-led companies will create investment value regardless of who sits in the White House. 3

4 Clearing a Common Misperception Off the Table The market does not perform any better when the pro-business party is in the white house. Exhibit 1: Neither Party Can Lay a Claim to Delivering Better Market Performance Sources: The New York Times. As of 10/26/12. DJIA is an acronym for the Dow Jones Industrial Average. Past performance does not guarantee future results. 4

5 Clearing a Common Misperception Off the Table Exhibit 2: Investors Who Ignore the President s Party Fare Best Sources: Bloomberg, OppenheimerFunds. As of 12/31/14. Past performance does not guarantee future results. 5

6 One Caveat and Two Predictions Caveat: Forecasting is not an exact science. Prediction 1 House of Representatives The Republican Party will likely retain control of the house of representatives. Prediction 2 Senate Regardless of who controls the senate, the next president isn t likely to have a filibuster-proof upper house. 6

7 Six Truths about Washington Regardless of Who Wins 1 Gridlock Doesn t Mean Nothing Gets Done. Example: Federal Budget Sources: 5) Table 1.2.; 6) 7

8 Six Truths about Washington Regardless of Who Wins 2 Changes in Washington Don t Typically Come All at Once But in Increments. 8

9 Six Truths about Washington Regardless of Who Wins 3 Campaign Rhetoric Doesn t Always Influence What Happens During a President s Tenure. Example: Energy and the Environment Sources: 5) 9

10 Six Truths about Washington Regardless of Who Wins 4 Consumers and Businesses Have a Far Greater Impact on the Economy than the Government. Example: U.S. GDP Share Source: 10

11 Six Truths about Washington Regardless of Who Wins (Unemployment (Unemployment 5 The State of the Economy Influences Who Is President, Not Vice Versa. Exhibit 3: Presidential Elections Are Determined by the Level of the Misery Index (Unemployment and Inflation Rate) 2004 Sources: Bloomberg, OppenheimerFunds. As of 12/31/14. Past performance does not guarantee future results. 11

12 Six Truths about Washington Regardless of Who Wins 6 The Market Doesn t Care If the Public Is Happy with Who s President. Sources: Gallup, 2/28/15. The Presidential Approval Ratings were introduced to gauge public support for the President of the United States during the term. For illustrative purposes only and not intended as investment advice. Past performance does not guarantee future results. 12

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14 Issues that Could be Affected by the Election s Outcome 1 Public Policy Healthcare Entitlement Programs Taxes 14

15 Issues that Could be Affected by the Election s Outcome 2 Judicial Appointments 3 Regulatory Stance 15

16 Conclusions America now votes against the other party s candidate more often than they vote for their own. Exhibit 5: Most of Us Dislike the Other Party More than We Like Our Own. Sources: Alan I. Abramowitz and Steven Webster, The Only Thing We Have to Fear Is the Other Party: How negative partisanship is dividing Americans and shaping the outlook for the 2016 election, University of Virginia Center for Politics, June 4th,

17 Conclusions Changing your investments depending upon who wins office, is not a sound investment plan. DJIA During Republican President Ronald Reagan DJIA During Democrat President Barack Obama +130% Cumulative Price Return (1/20/1981 to 1/20/1989) +119% Cumulative Price Return (1/23/2009 to 12/31/2015) 17