- A 50-50 tie in the Senate won’t have major stock market implications and investors shouldn’t move money based on the Georgia election results, said David Bahnsen, chief investment officer of The Bahnsen Group.
- “If an investor’s asset allocation was to be substantially altered by a 50-50 Senate vs. a 51-49 Senate split, that asset allocation was never constructed well from the outset,” Bahnsen said in an email.
- While some investors may be worried that a blue wave will be negative for markets, Bahnsen said that the Democrat’s small lead will make it tougher than many expect to pass tax hikes and impose regulation.
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A 50-50 tie in the Senate won’t have major stock market implications, according to David Bahnsen, chief investment officer of The Bahnsen Group.
With Democratic candidate Raphael Warnock securing his victory on Tuesday and Democratic candidate Jon Ossoff leading by a slim margin as of Wednesday morning, there’s potential the Senate will be divided 50-50, with Vice President-elect Harris able to break any ties in the upper chamber.
Bahnsen told investors to not make any portfolio reallocations based off of the Georgia Senate results.
“If an investor’s asset allocation was to be substantially altered by a 50-50 Senate vs. a 51-49 Senate split, that asset allocation was never constructed well from the outset,” the investment chief said in an email.
While some investors may be worried that a blue wave will be negative for markets, Bahsen believes otherwise. “The Democrats’ small lead in both the Senate and the House will make it tougher than many believe to pass tax hikes, impose regulation and enact some of the other market unfriendly policies that investors have been worried about under a Blue Wave scenario,” he said.
He explained that there are three moderate Democrat Senators, most notably Sen. Joe Manchin of West Virginia, who may prevent dramatic legislation from passing.
Tech stocks reacted negatively to the Georgia election results on Wednesday morning, with the Nasdaq 100 down over 1%. Bahnsen attributed the move to investors moving money into value stocks in the hopes that a higher fiscal stimulus will benefit non-tech companies.
“I suspect the initial market reaction in the tech sector to the Georgia Senate results is more of a growth-into-value story rather than a tech regulation story, as there is arguably greater appetite for Silicon Valley regulation in the GOP,” said the investment chief.
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