As Donald Trump enters his second presidential term, investors are weighing how his policies may shape the markets. While political outcomes often capture attention, history reminds us that innovation and fundamentals have generally had a more enduring impact on the markets. Here is a closer look at three perspectives on navigating the current political and economic landscape, drawn from our latest insights.
- In a recent “What’s on Your Mind?” update, Client Portfolio Manager Kevin Collins addressed pressing questions about the market’s reaction to Trump’s presidency. From regulatory shifts in energy and financials to the resilience of innovation, Kevin emphasized avoiding politically driven investment decisions. Instead, he highlighted how technological advancement remains a pivotal growth driver, regardless of political shifts. Tune in to the conversation on our website.
- Does Investing in Politics Actually Work? In our Autumn Capital Markets report, we compare the performance of innovative stocks to the performance of politically-motivated strategies. After the 2016 election, investing in domestically-oriented companies based on America-First policies like tax cuts did not produce positive results. Similarly, after the 2020 election, investing in renewable energy companies based on environmentally friendly policies did not result in outperformance. We believe this illustrates why investors would be better served investing in the most innovative companies, regardless of political moves.
- Our Capital Markets report also offers further context on how elections shape market sentiment.
Dan Chung
and
Brad Neuman, CFA
, note that post-election periods often deliver strong equity returns as uncertainty diminishes, as seen in the chart below. However, the two also underscore the looming challenge of rising federal interest expenses, which they believe are on an unsustainable path.
Source: Morningstar and Alger, S&P 500 Index returns, since 1988. The performance data quoted represents past performance, which is not an indication or a guarantee of future results.
Stay updated with the latest trends in technology and innovation by subscribing to The Alger Recap newsletter. For more market insights, follow Alger on LinkedIn and Instagram, and Alger CEO and CIO
Dan Chung
on LinkedIn.
