It’s only fitting that the 2020 presidential election outcome is still undecided. In a year in which so much has already been put on hold, what’s one more delayed decision? As expected, President Trump is likely to lose the popular vote by a notable margin. However, as votes are still being counted in many crucial swing states, neither President Trump nor former Vice President Biden have secured enough Electoral College votes to win the presidency. And it could take weeks to tally all the votes.
Sadly, both Republicans and Democrats have begun trading accusations of foul play — and lawsuits will escalate following all the mudslinging. This type of environment will only further fuel people’s anxieties and frustrations.
In such an unprecedented year, this plot twist is almost expected. In fact, a Gallup Poll found that in the closing days of the presidential campaign, just 21% of Americans expected that the outcome would be known on November 3. Perhaps that partially explains why market volatility has remained muted as investors await an election outcome.
In an election that we’ve called a defining moment for America, Biden and Trump offered voters two very different paths forward. With such stark differences between the candidates on everything from COVID-19 and health care to taxes and foreign trade, most voters made up their minds early. As a result of the pandemic, more than 100 million Americans cast their ballots before November 3. That is more than 71% of all the voters in the 2016 presidential election.
Ironically, voters sure enough of their decision to vote early contributed to the indecision on election night. That’s because while states like Ohio and Florida could begin counting votes as they came in, other states had to wait until Election Day to begin. And due to the precautions in place because of the pandemic, mail-in votes take even longer to process — and there were a record number this year. Further complicating the counting, while some states require that ballots be received by Election Day, others require that ballots be postmarked by Election Day. For example, the swing state of Pennsylvania, with 20 electoral votes still on the line, will accept postmarked ballots until November 6.
And the winner is…
This isn’t the first time we haven’t had a decision on Election Day. Most recently, in 2000, it took 36 days before we knew that George W. Bush had defeated Al Gore.
To some extent, the uncertainty reflected in the pre-election Gallup Poll has been priced into the market. However, a prolonged delay or contested result could spark periods of volatility. Despite all the unknowns that surround this delayed election outcome, the backdrop for risk assets remains attractive. Historically, risk assets have performed well over most time periods, regardless of which party controls the White House and Congress. We continue to encourage investors to ignore the election outcome noise. Instead, they should focus on a long-term investment horizon with a disciplined investment approach and embrace the benefits of diversification. Often, increased market volatility provides investors with an opportunity to purchase attractive investments at lower prices.
Investors concerned about increased market volatility may want to consider bolstering portfolios with investments such as long-term Treasuries, gold, and low-volatility and high-quality stocks. Once the election outcome is determined, negative real interest rates, generous monetary and fiscal policies, the remarkable rebound in the economy and corporate earnings, and the anticipated defeat of COVID-19 will likely support the market rally continuing into next year.
Regardless of whether your candidate wins or loses, the dust will soon settle on Election 2020 — and hopefully the pandemic, too — empowering all of us to move forward more confidently into 2021.
The views expressed in this material are the views of Michael Arone through the period ended November 4, 2020 and are subject to change based on market and other conditions. This document contains certain statements that may be deemed forward looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Investing involves risk including the risk of loss of principal. Past performance is no guarantee of future results.
The information provided does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your tax and financial advisor. All material has been obtained from sources believed to be reliable. There is no representation or warranty as to the accuracy of the information and State Street shall have no liability for decisions based on such information.
The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without State Street Global Advisors’ express written consent.
SPDR ETF is the exchange traded funds ("ETF") platform of State Street Global Advisors and is comprised of funds that have been authorised by European regulatory authorities as open-ended UCITS investment companies. SPDR ETFs may not be available or suitable for you.
ETFs trade like stocks, are subject to investment risk, fluctuate in market value and may trade at prices above or below the ETFs net asset value. Brokerage commissions and ETF expenses will reduce returns.
Changes in exchange rates may have an adverse effect on the value, price or income of an investment. Further, there is no guarantee an ETF will achieve its investment objective.
SHARES IN THE FUNDS OF THE SPDR® ETF SICAV, SSGA SPDR ETFS EUROPE I AND SSGA SPDR ETFS EUROPE II PLC MAY NOT BE AVAILABLE FOR OR SUITABLE FOR YOU. THE VIEWS EXPRESSED IN THIS SITE DO NOT CONSTITUTE INVESTMENT ADVICE. INDEPENDENT ADVICE SHOULD BE SOUGHT IN CASES OF DOUBT. NEITHER THE INFORMATION NOR ANY OPINION CONTAINED ON THIS SITE CONSTITUTES A SOLICITATION OR OFFER TO BUY OR SELL SHARES OF THE FUNDS OR ANY OTHER FINANCIAL INSTRUMENT.
Standard & Poor's®, S&P® and SPDR® are registered trademarks of Standard & Poor's Financial Services LLC (S&P); Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (Dow Jones); and these trademarks have been licensed for use by S&P Dow Jones Indices LLC (SPDJI) and sublicensed for certain purposes by State Street Corporation. State Street Corporation's financial products are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates and third party licensors and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability in relation thereto, including for any errors, omissions, or interruptions of any index.
SPDR ETFs may be offered and sold only in those jurisdictions where authorised, in compliance with applicable regulations.
Information related to Mexico
This information does not constitute and is not intended to constitute marketing or an offer of securities and accordingly should not be construed as such. The Funds referenced herein have not been, and will not be, registered under the Mexican Securities Market Law (Ley del Mercado de Valores) and may not be publicly offered or sold in the United Mexican States. Disclosure documentation related to any of the aforementioned Funds may not be distributed publicly in Mexico and shares of the Funds may not be traded in Mexico.
You should obtain the Prospectus and Key Investor Information Document (KIID) relating to specific SPDR ETFs and read them carefully prior to investing. For further information and the Prospectus/KIID describing the characteristics, costs and risks of SPDR ETFs, download a Prospectus or KIID here, talk to your financial advisor, or obtain it from your local SSGA office.