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Equity investors cannot escape the deluge of political news,
with headlines ranging from the gridlock surrounding the next
stimulus package, rising cases of COVID-19 globally (including
President Trump) and the potential of a contested election
impacting markets. With this in mind, we take a quick trip through
history to study factor performance during recent elections from
the lens of the immediate election effect when political party
changed and first 100 days of the new administration, in addition
to the first year and full-term results.
The prevailing economic environment, rather than election
results, acted as a key driver of factor performance in the long
term
The two terms of the George W Bush and Barack Obama
administrations were characterized by the bursting of the internet
bubble in 2000 and the global financial crisis, respective market
events that had prolonged effects on factor performance
Momentum's extended cycle of outperformance over value has
spanned Barack Obama and Donald Trump's administrations and has
strengthened to levels last seen in Bill Clinton's term,
demonstrating indifference to political affiliation
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