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Louis Bennett
Financial Consultant
COPIA Wealth Management
Election 2016 in Perspective
Aaron Boehm
President
COPIA Wealth Management
Thursday, October 20, 2016
Everything Investors Need to Know—and Should Ignore—
about the Upcoming Election
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Overview
1. Clearing a Common Misperception off the Table
2. One Caveat and Two Predictions
3. Six Truths about Washington—Regardless of Who Wins
4. Issues that Could Be Affected by the Election’s Outcome
5. Election 2016—Our Biggest Conclusions
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Well-positioned, well-led companies will
create investment value regardless of who
sits in the White House.
A Proper Perspective
Misperception Predictions Six Truths Affected Issues Conclusions
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4
Exhibit 1: Neither Party Can Lay a Claim to Delivering Better Market Performance
The market does not perform any better when the “pro-business” party is in the white house.
Clearing a Common Misperception Off the Table
Misperception Predictions Six Truths Affected Issues Conclusions
Sources: The New York Times. As of 10/26/12. DJIA is an acronym for the Dow Jones Industrial Average. Past performance does not guarantee future
results. http://www.nytimes.com/interactive/2012/10/26/business/Presidential-Stock-Markets.html?_r=0Securities offered through KMS Financial Services, INC. Member FINRA/SIPC
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Exhibit 2: Investors Who Ignore the President’s Party Fare Best
Sources: Bloomberg, OppenheimerFunds. As of 12/31/14. Past performance does not guarantee future results.
Clearing a Common Misperception Off the Table
Misperception Predictions Six Truths Affected Issues Conclusions
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One Caveat and Two Predictions
Misperception Predictions Six Truths Affected Issues Conclusions
Caveat: Forecasting is not an exact science.
Prediction 1 – House of Representatives Prediction 2 – Senate
The Republican Party will likely retain control of the house of
representatives.
Regardless of who controls the senate, the next president isn’t
likely to have a filibuster-proof upper house.
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Six Truths about Washington—Regardless of
Who Wins
Misperception Predictions Six Truths Affected Issues Conclusions
1 Gridlock Doesn’t Mean Nothing Gets Done.
Example:
Federal Budget
Sources:
5) https://www.whitehouse.gov/omb/budget/Historicals. Table 1.2.;
6) https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/reports/50724-Update-OneColumn_0.pdf Securities offered through KMS Financial Services, INC. Member FINRA/SIPC
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Six Truths about Washington—Regardless of
Who Wins
Misperception Predictions Six Truths Affected Issues Conclusions
2 Changes in Washington Don’t Typically Come All at Once But in
Increments.
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9
Six Truths about Washington—Regardless of
Who Wins
Misperception Predictions Six Truths Affected Issues Conclusions
3 Campaign Rhetoric
Doesn’t Always
Influence What
Happens During
a President’s Tenure.
Example: Energy and the Environment
Sources:
5) http://www.eia.gov/forecasts/steo/query/index.cfm?periodType=ANNUAL&startYear=2000&endYear=2015&formulas=x13x4x64x3px20xgx44x2g
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Six Truths about Washington—Regardless of
Who Wins
Misperception Predictions Six Truths Affected Issues Conclusions
4 Consumers and Businesses Have a Far Greater Impact on the
Economy than the Government.
Example:
U.S. GDP Share
Source: http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm.
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Six Truths about Washington—Regardless of
Who Wins
Misperception Predictions Six Truths Affected Issues Conclusions
5 The State of the
Economy Influences
Who Is President,
Not Vice Versa.
Sources: Bloomberg, OppenheimerFunds. As of 12/31/14.
Past performance does not guarantee future results.
Exhibit 3: Presidential Elections Are
Determined by the Level of the Misery
Index (Unemployment and Inflation Rate)
2004
(Unemployment (Unemployment
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Six Truths about Washington—Regardless of
Who Wins
Misperception Predictions Six Truths Affected Issues Conclusions
6 The Market Doesn’t Care If the Public Is Happy with Who’s President.
Sources: Gallup, 2/28/15. The Presidential Approval Ratings were introduced to gauge public support for the President of the United States during the
term. For illustrative purposes only and not intended as investment advice. Past performance does not guarantee future results.Securities offered through KMS Financial Services, INC. Member FINRA/SIPC
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14
Issues that Could be Affected by the
Election’s Outcome
Misperception Predictions Six Truths Affected Issues Conclusions
1 Public Policy
Healthcare Entitlement Programs Taxes
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Issues that Could be Affected by the
Election’s Outcome
Misperception Predictions Six Truths Affected Issues Conclusions
2 Judicial Appointments 3 Regulatory Stance
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Conclusions
Misperception Predictions Six Truths Affected Issues Conclusions
America now votes against the other party’s candidate more often than they vote for their own.
Sources: Alan I. Abramowitz and Steven Webster, “The Only Thing We Have to Fear Is the Other Party: How negative partisanship is divid ing Americans
and shaping the outlook for the 2016 election,” University of Virginia Center for Politics, June 4th, 2015.
http://www.centerforpolitics.org/crystalball/articles/the-only-thing-we-have-to-fear-is-the-other-party/.
.
Exhibit 5: Most of Us Dislike
the Other Party More than
We Like Our Own.
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Conclusions
Misperception Predictions Six Truths Affected Issues Conclusions
+130% Cumulative
Price Return
(1/20/1981 to
1/20/1989)
+119% Cumulative
Price Return
(1/23/2009 to
12/31/2015)
DJIA During Republican
President Ronald Reagan
DJIA During Democrat
President Barack Obama
Changing your investments depending upon who wins office, is not a sound investment plan.
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