Thoughts on the mid-term election
Lately, I have been asked quite a bit about the mid-term elections and how the results will impact the stock markets. I’ve spent some time thinking and reading to provide as educated of an answer as I can. And the simple answer is – I have no idea and no one else does either!
Many polls are suggesting that the Republicans will lose control of the House and may break even or pick up a seat or two in the Senate. Historically, these results should be expected, as it’s typical that the President’s party loses seats in the first mid-term election after the Presidential election. Remember that the Democrats lost 63 seats in the House in 2010, the highest loss of a party in mid-term elections since 1938.
But let’s also remember that these polls are the same ones that gave Hillary Clinton an 85% chance of being elected President in 2016. I suspect that these polls are struggling to find a reflective sample of voters now that many people have given up their land lines and rely solely on unlisted cell phones.
More important for most of us will be the impact of the election on the economy and the markets. Many analysts believe that the markets have “priced in” the Democrats taking the House, meaning that they are expecting it. The speculation is that this was part of the reason for the volatility of the last few weeks. I don’t necessarily believe that is the entire reason for the volatility – I think rising interest rates factored in more.
There are plenty of things to worry about in the world, yet most of them are out of our control. Why should we spend so much time worrying about something we have no influence in?
This weekend I got to thinking about some friends I met in the spring of 2000. I owned a landscaping business in Clemson that was doing pretty well and was still bartending at The Esso Club on the weekends. One weekend, a group of guys from Charleston stopped in and we quickly struck up a conversation. They were in town for a guys’ trip to see a Clemson Baseball series. I invited them to join my friends and I in right field at the Cajun Café for the next day’s game.
Over the following year, I did some landscape work for one of the guys on Kiawah Island and became closer with a few of the others. We tailgated together for the 2000 football season and even traveled to the Gator Bowl together to watch Michael Vick and the Va. Tech Hokies run up and down the field on us.
A few of the guys partnered up on a construction development venture that was doing well. I was still doing some work for them and there was talk about me joining in. Prior to the 2001 football season, we even had a conversation about getting a luxury box in Death Valley together.
Then the technology bubble burst and September 11th happened. Their real estate venture went bust and they ended up suing each other. I lost touch with all of them. During that time, I got out of the landscaping business and started my financial career.
A few years ago, I found one of the guys on Facebook and we reconnected. He had started coaching his son in little league football and had really enjoyed it. He sold his business to become an assistant football coach. Over the next few years, he developed a reputation of being a great coach who the kids love to play for. Now he is a head football coach of a high school team who is the defending state champs and 10-1 looking to defend that championship.
When things fell apart for us in 2002, who would have imagined where we would be today. It seemed painful at the time, and it was. There were hurt feelings and a lot of questions about where we would all end up. But if that development business hadn’t failed, I wouldn’t have wound up in Sumter, met my wife, or had my two amazing kids. If that business had become wildly successful, Johnny may not have had the time to help coach his son’s football team.
There is no way to know who will end up controlling the House until all of the votes are counted tonight, or tomorrow morning. But I want to encourage you not to get too worried either way. We will adjust. We will be okay. Let’s instead focus on what is in our control. We can control the attitude we have toward others who may have a different political leaning than we do. We can control the risk in our investments.
While I have already voted and will be paying attention to the election results, I won’t be worried by them. I will be focusing on the things within my control.