Radford University finance professor talks with media about how presidential elections affect U.S. markets

Photo: WDBJ

How will the presidential election in November affect U.S. markets and, ultimately, our wallets?

Radford University Finance Professor Steve Beach appeared live on WDBJ Channel 7 Tuesday (July 19) morning to discuss why markets tend to dip during presidential election years when no incumbent is on the ballot. It’s the uncertainty about a new president’s policies that make investors nervous, Beach said.

“When we have change coming up, the markets go down about 2.8 percent in those particular years, and so I think that theme would hold up, potentially,” the professor said in regard to the election of a new U.S. president.

With all the uncertainty, how should people invest their money? It depends, Beach said.

“It depends on your age, your wealth you have accumulated, your income level, and your risk tolerance. All these things come into play on the decisions that people look to make,” Beach said. “I think going forward, that we have a period, probably, of lower returns than people got accustomed to back in the 80s and 90s and early 2000s. And it just has to do with many structural changes that we have. Not that we have doomsday on the horizon, that the economy is falling apart, but there are just structural changes.”

The professor said people should think “strongly” about how much money they are setting aside and they should diversify their portfolios and be willing to stick it out, not looking for the perfect time to get in or out of the market.

“I think that’s probably the best advice we can give to people,” he said. “Get yourself invested where you’re saving enough or you’re getting it invested in the market place. But don’t expect to hit a home run.”

Aug 1, 2016
Chad Osborne