The midterm elections are about a month away, and lots of clients are asking about their potential impact on investments. The political prognosticators call for the House of Representatives to flip to control of the Democrats while most think the Senate will remain in Republican control.
Let’s assume they get it right, this time.
A Democrat-controlled House could initiate impeachment proceedings against the President. The Republicans tried that during the Clinton administration, and it failed. Since impeachment proceedings take place in the Senate and require a 2/3rds majority for conviction, a successful impeachment is highly unlikely given the current awareness of Trump’s alleged crimes. However, it would provide a huge media distraction.
More likely is a dramatic slowdown of the changes currently underway, once the new Congress is seated. Make no mistake about it. Regulations and international trade agreements remain in the cross-hairs. Moreover, the lame-duck session of Congress following the election could push through Republican favored ideas, making laws which a divided government isn’t likely to overturn.
What if the pollsters get it wrong, again?
The odds of Republicans retaining control are much higher than the odds of Democrats taking both houses of Congress. In this scenario, we’d see two more years of the chaotic disruption led by the President. He is likely to continue pursuing his efforts to enhance the business environment through regulatory revamping and international trade negotiations. The lame-duck Congress wouldn’t be motivated to act hastily, potentially leading to better legislation.
Whatever happens because of the election on November 6, long run investors should not let their political viewpoints dictate their investment decisions. Short term traders and media addicts will make noise while good companies with sound business models will adapt to the political environment.
These comments are limited to the potential impact on business and investments. A lot more is at stake as the country confronts many social challenges. It is essential for everyone to get out and vote, regardless of how optimistic or bleak their viewpoint.
As always, please contact Enduring Wealth Advisors® with any questions or concerns.