The House of Representatives finally pulled the trigger and started a formal impeachment inquiry. This means that the HOR will determine if there is enough evidence to file articles of impeachment. If there is, they then will vote to determine if the president will go to trial for those charges. If approved, the trial is held by the Senate and is overseen by the Chief Justice, John Roberts. For the president to be found guilty and removed from office, there needs to be a two-thirds majority vote in the Senate on any one of the impeachment articles. Fyi, no president has ever been removed from office by the impeachment process.
So, how will this whole process affect your investments? For some insight, let’s take a look at the last time this happened. On October 8, 1998, the HOR began the impeachment of Bill Clinton. The impeachment was approved by the HOR and Clinton went to trial before the Senate. He was acquitted of all charges at the end of the trial on February 12, 1999. The entire process took about 4 months.
During those 4 months, the S&P 500 rose about 25%. This is a huge rise in that short amount of time but remember, we were in the midst of the dot com revolution. If Trump’s impeachment goes forward, we will be in a similar time frame as Clinton’s. For what it’s worth, these months are historically some of the best to be invested in stocks.
My take on it is this: stock and bond markets will make some wild swings as information comes out during this process. If Trump is found guilty, the markets might like Pence in there because of less uncertainty and chaos. However, in reality, the odds of the Senate finding Trump guilty is slim to none. Regardless of the outcome, the good news is that stock prices always revert back to a company’s fundamentals. So, if you’re invested in high quality companies, it doesn’t really matter who is living in the White House.
Let me know if you have any questions.
Joe Baker, CFP®
Baker Asset Management, LLC
joebaker@bakerassetmanagement.com
One thought on “How Impeachment Could Affect The Stock Market”