In presidential election years, investors are often reluctant to make large portfolio changes until there is clarity on who will win. This year, the contrast between the two candidates is so large on almost every issue that the effect on the stock market could be dramatic.

Below is an analysis of the bull and bear cases for each candidate. We’ve attempted to summarize the potential market perceptions, both bull and bear, based on the candidates’ stated views on a number of economic issues.

Highland Capital clinton winners losers

Post-election stock markets

We took a look at the year immediately following each presidential election from 1900-2008.*

Clinton 

Bull: Incumbent party wins  +15.1%

Bear: Democrat wins  +3.9%

Trump

Bull: Republican wins  +10.3%

Bear: Incumbent party loses -4.4%

*Source: MFS Investment Management “Primaries, caucuses and elections–oh my!,” based on data from Ned Davis Research

 

The stock market favors the known versus the unknown

Clinton

Bull: Establishment candidate with ties to Wall Street

Bear: Extension of Obama policies that will continue to expand the national debt

Trump  

Bull: Perception that he will bring real change to politics and upset the status quo

Bear: Wild card candidate who has done business with Wall Street

 

Taxes

Clinton

Bull: Tax increase on wealthy might increase collections, move toward a more balanced budget

Bear: Increase of estate tax and other progressive taxes on high earners that own stocks

Trump

Bull: Lower personal, corporate tax rates should stimulate economy

Bear: Trickle-down economics unproven to lift up the lower and middle classes

 

Immigration

Clinton

Bull: Continue to allow undocumented workers to provide needed labor

Bear: Globalist agenda not seen as working; uptick in social unrest

Trump

Bull: Strong nationalist policies, wants to bring manufacturing back to U.S.

Bear: Alienating a huge segment of U.S. workforce and large trade partner; deporting millions of undocumented workers will be a huge cost

 

Healthcare

Clinton

Bull: Move to single payer option will reduce overall premiums

Bear: Affordable Care Act losing providers as premiums continue to rise

Trump

Bull: Repeal Affordable Care Act; allowing sales across state lines will increase competition and lower premiums

Bear: Long, nasty fight to remove Affordable Care Act will mirror the uncertainty experienced when law was passed

 

Economic Policies 

Clinton 

Bull: Tax benefit for corporate profit sharing

Bear: Increased minimum wage will hurt small business growth

Trump

Bull: One-time 10% tax on foreign corporate earnings will bring back billions into U.S. economy

Bear: Potential currency war by declaring China a currency manipulator