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Midterm Elections – The What Ifs

By Don Schreiber, Jr. – WBI Founder and CEO

It’s getting gnarly out there. The bear has been reaching out of its cave and slashing stock prices, but will it come out of hibernation? With less than a week to go on midterm elections, we ponder the market effects of the election results. Putting politics aside, here’s our take on what could happen in each possible outcome:

  1. If the Republicans hold the House and the Senate, that might be enough to actually lift market sentiment as the current pro-growth policies would continue.

  2. If we get a Democratic changing of the guard in the House, and the Republicans hold on to the Senate, we could meander higher through the end of the year. It really depends on whether or not revenue trends perk up. Companies would have to stop guiding lower for revenue trends, and they would have to say next year will be awesome. That’s what we need if we have a neutral outcome on the election.

  3. If the Democrats take the cake on both sides, we think that could be enough to put us into bear market territory. We already have negative market sentiment, and that would push on it some. The president’s pro-growth policies at that point would definitely be called into jeopardy going forward.

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Past performance does not guarantee future results. The views presented are those of Matt Schreiber and Don Schreiber, Jr. and should not be construed as investment advice. Matt Schreiber, Don Schreiber, or clients of WBI may own stock/sectors discussed in this article. All economic and performance information is historical and not indicative of future results. This is not an offer to buy or sell any security. No security or strategy, including those referred to directly or indirectly in this document, is suitable for all accounts or profitable all of the time and there is always the possibility of loss. Moreover, you should not assume that any discussion or information provided here serves as the receipt of, or as a substitute for, personalized investment advice from WBI or from any other investment professional. To the extent that you have any questions regarding the applicability of any specific issue discussed to your individual situation, please consult with WBI or the professional advisor of your choosing. This information is compiled from sources believed to be reliable, accuracy cannot be guaranteed. Information pertaining to WBI’s advisory operations, services, and fees is set forth in WBI’s disclosure statement in Part 2A of Form ADV, a copy of which is available upon request. 

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Unless otherwise indicated all performance is sourced from Bloomberg.


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