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Facts, Stats and History: Election years and marketsVideo

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Video ADA Text: Facts, Stats and History: Election years and markets video

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Description: Elyse Ausenbaugh, Global Market Strategist at J.P. Morgan, takes us back through past presidential elections for some cues.

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Transcript: <h2>Note:</h2> <p>This video uses text and charts to reinforce spoken content.</p> <p>Legal disclosures appear.</p> <h2>On screen:</h2> <p>Investment and insurance products:</p> <ul> <li>Not a deposit</li> <li>Not FDIC insured</li> <li>Not insured by any federal government agency</li> <li>No bank guarantee May lose value.</li> </ul> <p>J.P.Morgan Wealth Management logo.</p> <h2>Note:</h2> <p>Elegant music plays.</p> <h2>On screen</h2> <p>A woman with long blonde hair and blue-gray eyes, Elyse Ausenbaugh, speaks from an office with large windows.</p> <h2>On screen:</h2> <p>Elyse Ausenbaugh, Global Market Strategist.</p> <h2>Elyse:</h2> <p>Let's face it: the 2020 U.S. election is a pretty big deal. And with the election coming up so soon, markets are bound to get volatile, right?</p> <h2>On screen:</h2> <p>Facts, stats, and history: ELECTION YEARS AND MARKETS.</p> <h2>Elyse:</h2> <p>It's true; market volatility tends to increase around the U.S. elections. Why? Well the answer's actually quite simple. It's because elections bring uncertainty.</p> <h2>On screen</h2> <p>A line graph appears titled &quot;Volatility Before and After Elections - CBOE VIX indexed to 100 in November of each presidential election year.&quot; It shows levels of volatility for the elections of 1992, 1996, 2000, 2004, 2012, and 2016.</p> <p>Source: Bloomberg. FactSet. 10/14/2019. 2008 is excluded from chart, but not in calculating the average return.</p> <h2>Elyse:</h2> <p>Sure, we can look at polls and prediction markets. Right now, they're showing a high likelihood the Democrats could sweep the White House and Congress. That's helped fuel gains for certain areas of the market that could benefit from some of the policies they're proposing.</p> <h2>On screen:</h2> <p>Democratic Proposed Policies: Big investments in sustainable infrastructure - clean energy stocks have rallied more than 50% over the past three months.</p> <h2>Elyse:</h2> <p>But we can also look at metrics like President Trump's approval rating, which has remained relatively steady even as the polls have changed…</p> <h2>On screen</h2> <p>A line graph labeled &quot;President Trump's Approval Rating&quot; shows an average of about 44.3, from 2016 through 2020.</p> <p>Source: Real Clear Politics as of October 20, 2020.</p> <h2>Elyse:</h2> <p>...or consider that Hillary Clinton actually had a bigger lead over Trump in key battleground states in 2016 than Biden does today.</p> <h2>On screen</h2> <p>A graph showing &quot;National Poll Average&quot; has Clinton at nearly 6 points coming out of August, and Biden at a little under 5 points coming out of October.</p> <p>Source: Real Clear Politics as of October 20, 2020.</p> <h2>Elyse:</h2> <p>What it comes down to is this: it's not over until it's over. And this year, investors are anticipating even more volatility than usual, especially in the weeks following the election.</p> <h2>On screen</h2> <p>A montage shows different people filling out ballots (at home and in person) at their polling places.</p> <h2>Elyse:</h2> <p>Political pundits have been anticipating a large increase in the number of mail-in ballots. For context: in 2016, about 75,000 people had already voted one month before Election Day. This year, that figure is over 11 million and still climbing. Given the novelty of such a large amount of early voting, there's lots of buzz over the possibility of legal battles over the results.</p> <h2>On screen</h2> <p>A numerical figure rapidly increases from 100,000 to over 90 million.</p> <h2>Elyse:</h2> <p>This lends to the potential for a contested election. That could mean that we have to wait weeks after Election Day to know for sure what the outcome is.</p> <h2>On screen</h2> <p>A rapidly changing calendar date indicates the passage of time from November 3rd to the end of January.</p> <h2>Elyse:</h2> <p>Remember Florida's &quot;Hanging Chad&quot; fiasco during the 2000 Bush vs. Gore race? Well, the markets saw ups and downs throughout that process and it ended up losing around 8%.</p> <h2>On screen</h2> <p>A line chart appears labeled &quot;Bush versus Gore 2000 Election - Hanging chad fiasco.&quot; It shows the S&amp;P 500 Index Level dropping from about 1430 to about 1320 from November 3rd 2000 to December 15th 2000, as:</p> <ol> <li>Florida orders machine recounts;</li> <li>Democrats ask for manual recounts in 4 counties;</li> <li>Florida Supreme Court orders manual recount of all ballots in the state;</li> <li>Supreme Court of the United States hears arguments on case;</li> <li>Supreme Court of the United States overturns Florida Supreme Court ruling that&nbsp; there will be no further recounts;</li> <li>Gore concedes and Bush is declared President-elect.</li> </ol> <p>Source: Market Watch, FactSet, uselectionatlas.org.</p> <h2>Elyse:</h2> <p>We could be due for a redux of the 2000 scenario depending on how things are shaping up on Election Night. Just note that the wider the margin of victory appears to be for one candidate, the less likely markets are to respond with heightened volatility.</p> <h2>On screen:</h2> <p>2020 Election: What should investors do?</p> <h2>Elyse:</h2> <p>In order to answer that question, let's take a look back at some previous elections. If we consider the 10 presidential elections that have happened since 1980, we learned that the S&amp;P 500 was higher 1 year later 8 out of the 10 times. And the average return? It was more than 10%.</p> <h2>On screen:</h2> <p>Presidential Elections: 1980 – the S&amp;P 500 was higher 12 months later.</p> <h2>Elyse:</h2> <p>But what about those two exceptions? Well, there was the wake of the 1980 election when we were in a recession that was triggered by aggressive policy tightening from the Fed in response to high inflation. And then there was 2000, when we were in the midst of the tech bubble bursting.</p> <h2>On screen:</h2> <p>1980 - Global recession; 2000 - Tech bubble burst.</p> <h2>Elyse:</h2> <p>The point is: the macro inertia matters much more for markets than the elections themselves. And right now, the economy is in the midst of a recovery. And of course, history tells us that even when there are bouts of market volatility, staying invested is a tried-and-true strategy to grow your capital over time. We emphasize the importance of diversification like complementing your equities with more defensive assets like bonds in order to smooth out the ride and help dampen some of the downside risk even when the stock market does get choppy.</p> <h2>On screen</h2> <p>A video clip shows the White House</p> <h2>Elyse:</h2> <p>But ultimately, we think that the recovery can and will persist, regardless of who's in the White House come 2021.</p> <h2>On screen</h2> <p>A video clip shows blossoming trees on the White House lawn.</p> <h2>Elyse:</h2> <p>And as investors, we want to have exposure to that rebounding growth, which is why we own stocks.</p> <h2>On screen</h2> <p>A line graph appears labeled &quot;While presidential party changes seem like a big deal in the moment - GDP has grown no matter who is in the White House.</p> <p>Real GDP, billions - (chained 2012 dollars)</p> <p>The chart shows a steady growth from about 1 in 1930 to nearly 25,000 in 2018 (Q3 projection) - throughout Democrat administrations, Republican administrations, and recessions.</p> <p>Source: Haver Analytics, White House History as of July 30th, 2020.</p> <h2>Elyse:</h2> <p>The biggest beneficiaries will look different depending on who wins. But overall, we have a constructive view of risk assets for the next few years.</p> <h2>On screen:</h2> <p>J.P. Morgan Wealth Management logo.</p> <h2>Note:</h2> <p>Legal disclosures appear.</p> <h2>On screen:</h2> <p>The information presented is not intended to be making value judgments on the preferred outcome of any government decision or political election. Investing involves market risk, including possible loss of principal, and there is no guarantee that investment objectives will be achieved.</p> <p>Asset allocation/diversification does not guarantee a profit or protect against a loss.</p> <p><strong>Past performance is not a guarantee of future results.</strong></p> <p>This video and its content have been developed for J.P. Morgan Securities LLC clients and prospects, and is for informational and educational purposes only. It is designed to provide general market commentary and information relating to certain services offered by J.P. Morgan Securities LLC, an affiliate of JPMorgan Chase &amp; Co. Opinions expressed herein are those of the author and may differ from those of other J.P. Morgan employees and affiliates. Opinions expressed herein are those of the author and may differ from those of other J.P. Morgan employees and affiliates.&nbsp;</p> <p>The information and views expressed are not intended to provide specific advice or recommendations for any individual. You should carefully consider your needs and objectives before making any decisions. For specific guidance on how this information should be applied to your situation, you should consult your Advisor.</p> <p>J.P. Morgan Wealth Management is a business of JPMorgan Chase &amp; Co, which offers investment products and services through <strong>J.P. Morgan Securities LLC (JPMS)</strong>, a registered broker-dealer and investment advisor, member of FINRA and SIPC.&nbsp; Annuities are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. JPMS, CIA, and JPMorgan Chase Bank, N.A. are affiliated companies under the common control of JPMorgan Chase &amp; Co. Products not available in all states.<br> </p> <p>Copyright {{copyrightCurrentYear}} JPMorgan Chase &amp; Co.</p>

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