We do not like to make predictions ("Prediction is very difficult, especially if it's about the future.")

And we do not like to let politics influence our long-term investment decision making.

It would then follow that we especially do not like to make predictions about politics. However, today we will bend our own rules and make a political prediction: though there are fewer than three months until the U.S. presidential election, the insanity associated with this election is almost guaranteed to increase exponentially as we get closer to Election Day on November 8th.

We had the great opportunity to try to make sense of the potential insanity with the help of Greg Valliere, a seasoned political strategist who does enjoy, and is very good at, making political predictions. During a recent meeting, he talked at length about today’s political circus and the uncertainty it brings to capital markets.

From his perch he sees three potential election outcomes: (1) Hillary Clinton wins by a small margin of victory but the makeup of the House and Senate stays Republican; (2) Clinton wins by a huge margin and one or both of the House and Senate goes Democrat; and (3) Trump wins.

Scenario #1 promises the outcome with the least amount of uncertainty for investors. A newly elected president with a small public mandate facing an unfriendly Congress makes for more of the same political gridlock that has been in place for some time. In other words, there would be no surprises. The other two outcomes ratchet up the uncertainty and the potential for increased market volatility.

Despite Clinton’s lead in the current polls, Valliere says it is still way too early to predict a winner. He is hoping to glean further insight after the first presidential debate on September 26th. For a further look into the day, please read about Valliere's thoughts on the Cohen & Company Never Miss Blog.

 

 

This material is for informational purposes only and is not intended to serve as a substitute for personalized investment advice or as a recommendation or solicitation of any particular security, strategy or investment product.  The opinions expressed do not necessarily reflect those of author and are subject to change without notice.  Investment advisory services offered through Sequoia Financial Advisors, LLC, an SEC Registered Investment Advisor.