Remember, Remember the 5th of November: Harris V Trump - Sparks to Come?

As we approach November 5th, a day steeped in British folklore, it takes on fresh significance in the U.S. with Election Day bringing anticipation and potential volatility to global markets.

‍Much like the fireworks of Guy Fawkes Night, this election is likely to ignite market movement, sparking questions among investors on how either a Kamala Harris or Donald Trump presidency will affect portfolios both in the short and long term.

What Could a Harris or Trump Presidency Mean for Markets?

The impact of either candidate winning has been a consistent topic of conversation with clients over the past few months, with each candidate's policy priorities casting unique and opposing influences on the stock market.

A Kamala Harris Presidency

A Harris presidency would likely reinforce the current administration’s focus on environmental reform, expanding efforts to reduce emissions, support sustainable technologies, and accelerate the shift towards renewable energy. With a Harris-led administration, federal support for green initiatives would aim to tackle climate change actively while reshaping the U.S. energy infrastructure. This could lead to substantial investment incentives for companies developing clean energy and renewable resources, creating significant opportunities in green technology, electric vehicles, and energy-efficient manufacturing. As investment pours into sectors aligning with environmental sustainability, traditional energy sectors like oil and gas may face increased competition and regulatory challenges.

Harris’s stance on corporate taxation would also likely see adjustments aimed at higher-income brackets and corporations, aiming to address wealth disparity and potentially fund additional infrastructure and green energy initiatives. While tech companies, particularly those based in California, may find alignment with Harris’s policies due to their support for environmental initiatives, other sectors might see profit margins impacted by these tax changes. Industries sensitive to tax policy, such as finance and traditional manufacturing, could experience short-term volatility as markets react to tax adjustments. Over time, however, the shift towards a sustainable economy may provide a more stable, long-term growth environment for industries aligned with these environmental and technological advancements.

A second Trump Presidency

A second Trump presidency would likely pivot back to traditional economic policies, focusing on deregulation and tax cuts, particularly benefiting industries in oil, natural gas, and traditional manufacturing. Trump's support for fossil fuel industries would be aimed at bolstering U.S. energy independence, possibly leading to a resurgence in domestic oil and gas production and increasing employment within these sectors. His administration would likely attempt to reduce restrictions on industries that saw increased regulation under the current administration, providing an immediate boost to sectors like energy, coal, and heavy manufacturing.

However, Trump’s stance on trade, particularly with China, could introduce significant uncertainty in global supply chains. His commitment to protectionist policies could lead to further tariffs and increased costs for imported goods, impacting not only consumer prices but also the international business operations of American companies reliant on global sourcing. This protectionist approach might provide initial growth in U.S.-based manufacturing and jobs but could hinder relations with major trading partners. Additionally, emerging markets, which are particularly sensitive to U.S. trade policy shifts, could see increased volatility due to uncertainties in supply chain continuity and trade flow stability.

Global Ripple Effects

Both candidates' policy directions carry implications far beyond the U.S. economy. A Harris administration could inspire similar sustainability goals in Europe and Asia, reinforcing green initiatives worldwide. For global markets, this trend could create upward momentum for companies in renewable energy and sustainable technology. Conversely, Trump’s policies may strengthen fossil fuel markets globally, pushing oil and gas prices higher and potentially limiting the pace of green energy expansion.

Still, broader economic events such as inflation trends, geopolitical tensions, and unforeseen global crises often play a more influential role than policy changes alone. Market volatility triggered by elections typically gives way to long-term trends driven by economic fundamentals. In this light, the effects of the election should be viewed as one of many influences on the larger economic landscape.

The Importance of Staying Invested Through Short-Term Volatility

For investors, the key takeaway is that political events, while impactful, are not reliable predictors of long-term market performance. Adjusting portfolios based solely on election outcomes can be risky. Elections have historically introduced short-term volatility, but over time, the market has demonstrated resilience and a tendency to grow in line with economic fundamentals. At Skybound Wealth, we emphasize the importance of staying committed to a long-term investment strategy, avoiding reactionary moves that can disrupt compounding returns. Historical data shows that markets rebound from political uncertainty, with growth over time reflecting deeper economic drivers rather than short-lived political cycles.

Volatility is Inevitable, but Growth is Unstoppable

As we approach polling day, let’s remember that while the election may bring market volatility, markets are built to recover and grow over time. Whether the next president is Kamala Harris or Donald Trump, the best strategy is to remain focused on long-term goals rather than being swayed by short-term events. On November 5th, as history unfolds, patience and discipline will be key to successful investing. After all, it’s not the election outcome that shapes your financial future—it’s your commitment to your plan.