Source: Golden Ten Data

In a tense US election year, people may be concerned about the final outcome of the Trump-Biden showdown and the turmoil the market may face, but iCapital Chief Investment Officer Anastasia Amoroso (Anastasia Amoroso) said investors don't need to worry about the impact of the incident on their portfolios right now.

Everyone's eyes may be on the upcoming confrontation between current President Joe Biden and potential Republican candidate Trump, but the market veteran mentioned above said that it will not be political turmoil that will ultimately affect the stock market. Instead, he expects that improved earnings and the Federal Reserve's easing of monetary policy will drive the stock market higher.

Amoroso said that both voters and the market will pay close attention to “Super Tuesday” on March 5, and the nominations of candidates from both parties will be confirmed at that time.

In fact, historical data suggests that the market should develop smoothly until election day.

Amoroso said, “In the past eight election cycles, the S&P 500 index achieved median return rates of 7.5% and 4.2% in the 12 and 9 months before election day, respectively, and there is a possibility of an increase of 87% and 75%, respectively.”

However, iCapital's data shows that stock returns will gradually decline as the election cycle ends and peaks on election day.

During the three months and one month before the election, the median return for the S&P 500 index was 0.5% and 0.8%, respectively. In both cases, the upside is about half as likely.

“We think it's too early to worry about the election results,” Amoroso said.

According to iCapital, it is certain that investors should begin to pay attention to potential changes in taxes, tariffs, and technology.

For example, if Trump actually becomes the Republican nominee, the market may begin to digest “the potential advantages of companies that benefit from tax cuts that are extended (otherwise expiring in 2025), or those that focus domestically and have little exposure to overseas revenue,” she said.

Similarly, investors can prepare for downside risks associated with antitrust concerns or tougher trade policies.

Amoroso said, “We will be watching these factors closely, although they are not yet obvious. At the same time, market trends may depend on the direction of the Federal Reserve's interest rate policy.”

Editor/Corrine