Harris Or Trump: A Cheat Sheet To Investing In An Election Year On The Issues

You know those things you get in the mail where a nonprofit or some such lists all of the measures or campaign positions ahead of an election and proceeds to tell you how to vote down the ballot? 

We hate those things. So we’re not going to do that. Instead, with the Presidential election just over a month away (yep, today is October 1st), The Juice will summarize some of the key election-related info we have published in recent weeks so you can see it all in one place. And we’ll be sure to add a little more between now and November 5th.

First things first. How do election years and presidents impact the stock market? The Juice reviewed, compiled and crunched a bunch of data and discovered very little impact. 

For example—

• In year one post-election, stocks go up, on average, 8.3%.
• In year two, they rise, on average, 3.4%.
• In year three, they increase by, on average, 14.7%.
• In year four — so, in an election year — stocks head higher by, on average, 9.1%. 

So, all upside and across different regime mixes, meaning no matter how you combine the White House and Congress, there isn’t much difference in how stocks perform. 

There’s also no rhyme or reason to sector-specific performance either:

For example, clean, or alternative energy, performed better under Trump, while the defense and traditional energy sectors did better under both Biden and Obama. Name the sector and it’s a mixed bag with up years and down years scattered across years with about zero regard for the political party occupying the White House.

Two other interesting tidbits—

• When the S&P 500 goes up during the three months ahead of an election, the incumbent party has won 20 out of 24 times since 1936. 
• In 1968, Lyndon B. Johnson decided to not run for re-election and the man who would have been the democratic nominee for president, Bobby Kennedy, was killed. The stock market went up by 15% after LBJ’s announcement through the end of 1968.

Indeed, Biden dropped out of the race on Sunday, July 21st. Since then, the S&P 500 is up about 3.5%. Not beating the world, but it’s up and still on its same upward trajectory. 

Now, onto some issues that might be on investors’ radars. 

The Capital Gains Tax

As The Juice noted a couple of months ago—

There has been a lot of talk about Kamala Harris supporting a plan to tax unrealized capital gains.

And, as it turns out, if enacted this plan would only affect people with a minimum of $100 million in wealth, who do not pay, at minimum, a 25% tax rate on their income, including unrealized capital gains. From there, you would only pay the tax if, of your $100 million in wealth, 80% is in the form of tradable assets. So this doesn’t include equity in a private company or real estate.

So, basically, nobody you give a damn about would be affected. And most economists don’t think this would make much of a difference. From what The Juice has gathered, the best way to tax the ultra-wealth is to directly tax them. Like if you’re over a certain limit, we’re taking 10% or whatever. 

Income Taxes

A big one. 

At the moment, we’re living under the Trump tax cuts, which are set to expire next year.  

Here’s an objective assessment—

Tax brackets would go from the current 10%, 12%, 22%, 24%, 32%, 35% and 37% to the old 10%, 15%, 25%, 28%, 33%, 35% and 39.6% structure with difference income thresholds for single and married filing jointly taxpayers. 

But, let’s put this in perspective. A middle income taxpayer will have saved about $900 by 2025, whereas somebody in the top 1% will have saved, on average, roughly $61,000 under the Trump tax cuts, according to analysis from Urban-Brookings Tax Policy Center. 

If the Trump tax cuts expire, the Tax Foundation estimates that the average tax bill would increase by between just under $2,000 and just over $4,000 per filer, depending on which state you live in…

Nationally, the group anticipates an average increase of $2,853 per taxpayer nationwide. In sum, the Tax Foundation claims about 62% of taxpayers would see their taxes go up.

As for Kamala Harris on taxes, as we detailed—

… her and Trump pretty much agree on taxes for a majority of Americans. Stress a majority and pretty much. 

For most intents and purposes, Harris would like to keep things as they are for taxpayers who earn less than $400,000 a year. So, we’re talking about 98% of taxpayers. But this is where the agreement between the two ends. As is often the case on taxes in America, it comes down to what you do (or don’t do) for lower-income Americans and how hard you go after the highest earners.

Harris wants to expand the child tax credit to $6,000 and make it refundable, which means you’d receive the money even if you don’t have taxes due. 

In addition—

Harris proposes a minimum 25% tax on people who have more than $100 million in wealth (this could include the aforementioned tax on unrealized capital gains). For households with yearly income of $1,000,000 or more, Harris proposes charging a 28% tax on long-term, realized capital gains. This is up from the current rate of 20% on high earners.

The Juice would like to know. What do you think about Harris’s proposals on taxes? Use the feedback link at the bottom of the page to let us know. 

While you’re at it, you can also tell us what you think of the two candidates on—

Social Security

Here are their “plans” on Social Security in a nutshell. 

That’s a lot of info. 

We’re not even going to comment on Trump’s $100,000 watches for sale, whether or not Harris ever worked at McDonald’s or JD Vance’s ability —or lack thereof — to properly order in a donut shop. 

Election season makes our heads hurt.  

The Bottom Line: But the cool thing about it is that, while it’s nice to know (or try to figure out) where the candidates stand on specific issues, they ultimately tend to have very little impact on how the stock market performs. 

Some people say this time is different. But how many times have we heard that before? If you give us feedback, sound off on that as well. Is this time really going to be different? Is America destined to become Brazil or Argentina or crumble into a socialist republic or realize one of the many other sad eventualities people are throwing around these days? 

We definitely want to know. We’ll read your emails and maybe include them in a future installment of The Juice, but only after our periodic investments into the broad stock market. Like in the freaking ETFs listed below in today’s Trackstar top five!

• The Area Of The Stock Market That Could Be Set To Explode
• Adding Color to the Investment Spectrum
• Benzinga’s ‘Stock Whisper’ Index: 5 Stocks Investors Secretly Monitor But Don’t Talk About Yet
• Check Out The Juice’s Favorite ETF Screen