http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments How Will the Election Affect Your Investments? The mid-term elections are almost upon us. It is almost a certainty that there will be a substantial shift in the balance of power in congress. Although smart investors keep their politics and their investment strategies separate, it is still a good idea to consider how the election will affect your investments. In this regard, Forbes has some thoughts about the risk to stocks from the mid-term election. We currently think there is only one scenario that has a reasonable probability of happening, looking at current political polling. (Yes, we get that polls are flawed but, in the aggregate, they do provide us insight). The highest probability scenario is the Democrats take the House, and Republicans retain the Senate. Going back to 1934, the President’s party has lost seats in the House 86% of the time in midterm elections. The bottom line to their argument is that a politically divided congress is worse for investors than when the same party controls both houses. All spending bills must, by law, start in the House of Representatives. But, both houses of congress and the president need to concur for a bill to become law. Divisive issues such as health care immigration will likely be hamstrung for the next two years. Issues such as infrastructure spending, trade, and antitrust law will have some hope of gathering a consensus and getting passed. Will There Be A Correction and a Recovery? A couple of months ago we asked if the mid-term elections would cause you to lose money. That analysis ignored who won or lost in mid-term elections and just looked at how the stock market fared afterwards. The insights came from Zack’s Investment Management. Going back to 1962, the average correction during a midterm election year was an eyebrow raising -19%. AND Since 1962, the average bounce for stocks following the midterm correction was a sturdy +31%. According to these folks, you may lose money going into the mid-term election but gain more afterwards.

1. How Will the Election Affect
Your Investments?
By www.ProfitableInvestingTips.com

2. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
The mid-term elections are almost
upon us.

3. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
It is almost a certainty that there will be
a substantial shift in the balance of
power in congress.

4. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
Although smart investors keep their
politics and their investment strategies
separate, it is still a good idea to
consider how the election will affect
your investments.

5. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
In this regard, Forbes has some
thoughts about the risk to stocks from
the mid-term election.

6. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
We currently think there is only one
scenario that has a reasonable
probability of happening, looking at
current political polling.

7. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
(Yes, we get that polls are flawed but,
in the aggregate, they do provide us
insight).

8. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
The highest probability scenario is the
Democrats take the House, and
Republicans retain the Senate.

9. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
Going back to 1934, the President’s
party has lost seats in the House 86%
of the time in midterm elections.

10. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
The bottom line to their argument is
that a politically divided congress is
worse for investors than when the
same party controls both houses.

11. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
All spending bills must, by law, start in
the House of Representatives.

12. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
But, both houses of congress and the
president need to concur for a bill to
become law.

13. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
Divisive issues such as health care
immigration will likely be hamstrung for
the next two years.

14. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
Issues such as infrastructure
spending, trade, and antitrust law will
have some hope of gathering a
consensus and getting passed.

15. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
Will There Be A
Correction and a
Recovery?

16. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
A couple of months ago we asked if
the mid-term elections would cause
you to lose money.

17. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
That analysis ignored who won or lost
in mid-term elections and just looked
at how the stock market fared
afterwards.

18. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
The insights came from Zack’s
Investment Management.

19. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
Going back to 1962, the average
correction during a midterm election
year was an eyebrow raising -19%.
AND
Since 1962, the average bounce for
stocks following the midterm correction
was a sturdy +31%.

20. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
According to these folks, you may lose
money going into the mid-term election
but gain more afterwards.

21. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
What Other Factors Are in
the Mix?

22. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
There are two issues this year that
stand out as risks.

23. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
The first is the trade war with
China and the fact that it may become
permanent.

24. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
Both the USA and China see the trade
war as “zero sum” game.

25. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
A zero sum game is a situation in
which the losses by one side are the
gains of another and vice versa.

26. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
China sees is place in the world as the
dominant global economic and political
power, which are positions now held
by the USA.

27. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
The USA sees itself as maintaining its
place in the world and is justifiably
fearful of a world controlled by China.

28. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
There may be a point at which neither
side will back off of its demands.

29. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
When that happens, trade between the
USA and China will diminish.

30. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
There is a chance that trade between
China and Europe could also suffer is
Europe adopts the view of the USA.

31. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
This would result in different global
trade patterns and diminished global
trade.

32. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
The USA and EU have tiptoed around
this China issue for years, taking
advantage of cheap production costs
while steadily losing manufacturing
capacity and giving away trade
secrets.

33. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
That is likely to come to an end and
the end may not be pretty.

34. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
A well-functioning US government
would be a positive factor in such a
situation.

35. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
But, that is not what we have today
and there does not seem to be a
remedy in sight no matter how the mid-
term elections work out.

36. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
The other factor is the “elephant in the
room” with the Mueller investigation
into Russian meddling into the 2016
elections and how close that
investigation will move toward the
president himself.

37. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
If the results of the investigation cast
blame on the president and the
Democrats take back the House of
Representatives, impeachment is
likely.

38. http://profitableinvestingtips.com/profitable-investing-tips/how-will-the-election-affect-your-investments
Then the issues will be if the
Democrats pick up seats in the Senate
and if Republicans will follow party
lines (the Trump Party or the
Republican Party) with their votes.