How the presidential election will affect market value

Who will be the next President of the United States? You’ll find polls and pundits out there saying different things, and for business, that’s precisely the problem. Whether your personal sympathies lie more with Hillary Clinton or Donald Trump, uncertainty means a volatile market – and that makes how you run your business much more complicated.

Why business needs to pay attention to politics

Some people don’t pay any attention to politics, but if you’re a business owner, that’s not something you can afford to do. Why? Because no matter how hard you work, or how good your ideas are, success in business ultimately depends on your ability to make accurate predictions, most importantly regarding the way the markets will behave.

This is especially important for startups, which need to determine the right time to launch and find an angle that will attract investors, whose choices will depend on things like the President’s pet issues, investment promises and attitude to tax.

In an average post-election year, growth slows to the lowest point in its four-year cycle, averaging 3.4 percent. Following the departure of a two-term President, you can typically expect losses of 2.8 percent. Following such a closely-contested election, it’s quite probable the markets will be more severely affected than usual.

Expectations of Donald Trump

If Donald Trump is elected President, it’s likely to cause global consternation, unsettling the international markets and causing the dollar to fall. This could be good news for exporters, as foreign markets snap up American goods when they’re cheap, but this will likely be short-lived.

What will happen after that will depend on whether Trump is willing and able to soften his rhetoric and create the impression that it will be business as usual. In the long term, stability will be important to the health of the markets and especially to businesses with overseas suppliers.

Two sectors look set to gain in any scenario where Trump becomes President of the United States, however: defense and infrastructure, the two areas he’s identified as priorities for government spending and incentivization.

Expectations of Hillary Clinton

Of the two candidates, Hillary Clinton is probably the more predictable, and the fact she would be a Democrat following a Democrat increases the likelihood that the markets would stabilize soon after her inauguration.

Her approach to taxation and regulation, however, is worrying some business owners, so it’s worth looking carefully at what she has said about your sector in order to work out how you might be affected.

Her plans for Medicare could hurt the healthcare industry, but help small businesses that can’t afford to offer their employees’ health insurance by giving them a greater talent pool to draw on. It’s widely believed that bonds would do better under Clinton, but the impact of taxation may mean that yields are lower.

What startup businesses can do

It’s important to recognize that, while instability is threatening to the economy overall, it can also provide opportunities, with niches opening up as established companies fail or move on to new pastures.

How to predict such niches? That’s something that requires ongoing attention, as the market is constantly shifting. Reading the work of respected financial advisors like Fisher Investments CEO Damian Ornani can help, as can watching the way the markets respond each time one of the candidates gains the upper hand.

So far, market responses to the election have been surprisingly muted; oil and unemployment are still much bigger concerns than who’s going to end up in the White House, but there’s an underlying volatility that has some experts worried.

Furthermore, the question of who will be President is complicated by the question of who will end up controlling Congress, with some suggesting that, although it could make it difficult for the new President to pass legislation, a split Congress would actually be the best thing for the markets, precisely because it would slow down the pace of change.

Others simply recommend putting money into foreign stocks, so as to have some security no matter what happens. A Clinton win could potentially depress the banking industry, while a Trump win could depress US stocks; either way, foreign investments should remain more stable until things settle down.

Setting up a new business is always a challenge, and doing so in an election year even more so. But because of this, others will be holding back, and that means that, if you pay close attention and make good decisions, the next big victory could be yours.