Why investors are unwise to bet on elections

The rewards of doing so successfully are difficult to ignore, since an incoming government has a huge capacity to influence investors’ returns. Its fiscal decisions will alter the course of sovereign-bond yields, company profits and foreign-exchange rates. Subsidies, tariffs and regulation will determine which industries get a boost and which are knocked for six. Less tangible, if no less important, the vibes that a new administration gives off concerning trade, cross-border investment and commerce in general will help decide whether foreign capital floods in or beats a quiet retreat. It all hits the bottom line.