The election is weeks away and everyone’s asking us what that means for the stock market. Ironically, most people seem confident stocks will go up if their party wins, but down if their party loses…regardless of who their party is! Republicans are afraid of higher taxes and regulation, Democrats are afraid of social unrest and a growing wealth divide.

The stock market takes multiple factors into consideration, and is pretty efficient at pricing in future possibilities well in advance.

With this in mind, we’re offering five non-partisan scenarios in which the market can rise even if your candidate doesn’t win.

The economy continues to recover

Proof, that the market prices in future events and outcomes prettttty well, The S&P 500 dropped over 34% in March, and GDP dropped 31% in (April-June) of 2020.

Stocks then recovered quickly ahead of the economy again, nearly breaking even by August, ahead of the GDP rebound:

Stock Earnings Continue to Grow

Company earnings have a way of recovering after recessions. Private enterprise has a way of adapting to business environments in order to preserve and increase cash flows. Price hikes, cost reduction, new products, technology, and improved efficiencies, etc. can all find their way to the bottom line. Historically, company earnings growth has been the single biggest determinant of stock price.

Most analysts believe this recession will eventually end and the business environment will return to somewhat normal.

A Covid-19 Vaccine Arrives

The entire pharmaceutical and healthcare industry is racing to create a vaccine for the CoronaVirus, and eventually a winner will emerge. While there are going to be skeptics, the vaccine will instill a sense of social confidence for at-risk populations. This can go a long way towards resuming life and business as normal.

The Infrastructure Bill Stimulates The Economy

One of the leading bipartisan efforts is an infrastructure bill which was passed in July. Despite some political theater, it’s likely the 1.5 Trillion bill will improve roads and transit, push for deep reductions in pollution, direct billions to water projects, affordable housing, broadband, schools, and upgrade hospitals. This money will make it’s way to thousands of private engineers, contractors and materials companies and add thousands of jobs.

Foreign Relations Improve and Supply Chains Follow

Anyone who’s tried to order golf clubs, bikes, machine equipment, computer hardware, etc. has likely noticed higher prices and a delay in shipment and arrival times. Due to higher tariffs, factory shutdowns, currency changes, etc. parts manufactured in other countries have been delayed.

Improved foreign relations could stabilize global trade and improve the speed that manufactured goods are ordered and delivered. This would lead to a resumption in global growth and could lead to higher earnings.

While there’s always a reason to be worried if you look for one, try to keep a long-term perspective on your investments. Poorly timing an event can cost your investment returns significantly.

For further reading, American Funds put out this can’t-miss guide on elections and stocks: