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Donald Trump may not like it, but the American stock market does better under a Democratic president. But staying invested no matter who’s in the White House reaps the biggest rewards of all, new research shows.
With the US presidential race too close to call, trader Charles Schwab has analyzed how the S&P 500 index of major US stocks performed when the Oval Office was red for Republicans or blue for Democrats.
He found that, since 1948, anyone who had kept $10,000 invested in the index alone when there was a Republican president would have seen that amount grow to $312,000 today.
The same sum would be worth $1.2 million today if it were invested only under Democratic presidents, despite the fact that both parties have a similar number of mandates.
But if that money had stayed invested regardless of who was in power, it would have increased to $38 million.
Narrow call: Donald Trump may not like it, but the US stock market does better with a Democratic president
“From a historical perspective, investors would be better off staying in U.S. markets, regardless of which party is in the White House,” said Richard Flynn, who runs the broker’s British arm.
American presidents like to take credit when actions do well and blame their predecessor when they fail.
In 2020, Trump called a press conference to welcome the Dow Jones surpassing 30,000 points, calling the milestone “a sacred number.”
‘The American economy is huge and complex. “It is always difficult to link any legislation directly to economic and market outcomes,” Flynn said.
For those who want to back British companies depending on whether Trump or Kamala Harris win Tuesday’s election, broker Peel Hunt has compiled a list of potential winners. Among his tips for a Trump victory are:
- Wood Group: A quarter of the engineer’s sales are in the US, primarily oil and gas, so drilling incentives would be ‘very positive’
- Ashtead: The plant rental group makes most of its money across the pond, so it would benefit from any Trump tax cuts on corporate profits.
- IHG: The hotel group pays “a very high level of tax” in the US, so it would also benefit from a lower rate
Meanwhile, Peel Hunt’s shared tips for a Harris victory are:
- Ceres Power: Its promotion of green energy would boost the fuel cell technology group in its search for license partners in the US.
- ITM Power: Clean fuels and energy storage company tenders for electrolyzer projects in the US
- Clarkson: Shipping company would avoid retaliatory tariffs that would affect global trade if Trump wins
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