Thankfully, when it comes to impeachments, there is very limited historical data to review. We don’t have useful market numbers for the 1868 impeachment of President Andrew Johnson, and even if we did, the markets were so different 150 years ago that a comparison would be all but useless. This leaves us President Nixon’s pre-impeachment resignation in 1974 and President Clinton’s impeachment (and Senate acquittal) in 1998.
When President Nixon resigned, the U.S. economy was in the midst of a recession, with stocks already in a bear market. Stocks continued to fall in the months immediately following his resignation, but that might have happened regardless. Notably, the S&P 500 reached a bottom soon after Nixon departed. One year after Nixon’s resignation the S&P 500 (not counting dividends) was up 12%.
The opposite scenario unfolded when President Clinton was impeached. The S&P 500 had been in the midst of a bull market, though it had wavered a bit due to a currency crisis in emerging markets. But the S&P had already resumed its upward climb before Clinton’s impeachment, and it continued to rise after. One year later, the S&P 500 was up 19%.
Investment lesson: Don’t conflate impeachment furor with investment action.
While we will watch the process closely on your portfolio’s behalf, we won’t make the error of letting political dysfunction lead to portfolio disruption. The good news: Our investment discipline is unimpeachable.
Please note: This update was prepared on Friday, September 27, 2019, prior to the market’s close.
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