The long game

In general, politics does not have a major impact on the stock market in the long run.

There have been some political events like Brexit and surprise results from elections which have resulted in very short term moves in the market.

Yet, in my opinion, the stock market tends to return to its longer term cyclical trend very quickly.

In the case of Brexit, the market traded down on the day of the announcement, but quickly made back the majority of this loss within a few days.

Tax Reform

Some experts believe that the US tax reform agenda has prompted the market rally since the Trump election.

While this proposal may be supporting or accelerating movement in the stock market, this is not the primary cause of the upward movement in stock prices over the past 6-7 months in my view.

The reason, I believe, us that we are in the final phase of a secular recovery in the stock market.

Long Game

I think this rally would have happened regardless of tax reform, albeit probably at a slower rate.

Most investors have a long-term focus.

In my opinion, even investors who are looking for short term trading opportunities in the market will generally not look at political events as catalysts for market movements.

Photo Credit: Julie Edgley via Flickr Creative Commons

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