With the upcoming election, people want to know how the winner will affect the market. No one can predict who will win or which party will control Congress, but money experts are giving insights on what might happen and steps to mitigate potential risk.

Statistically, the U.S. stock market is weakest in the post-election year of a new president. This is referred to as the Presidential Election Cycle Theory. ABC News found that since 1900, stocks have gained, on average, 3.4% in the post-election year, 4% in the midterm year, 11.3% in the pre-election year, and 9.5% in an election year.

So what can people do to prepare for the post-election investment environment? These money experts gave their opinion to Forbes on how to invest around this election.

  • John Bogle, Founder of The Vanguard Group
    • The 87-year-old investment guru says this is the most chaotic election he’s lived through. There is a lot of uncertainty in the air, so his advice is to continue to save for retirement, but review your asset allocation. A good place to start is 65% stocks and 35% bonds. However, if you’re younger, he suggests having a heavier allocation in stocks and if you’re older, to have a heavier allocation in bonds.
  • Marilyn Cohen, CEO at Envision Capital Management
    • Cohen has two predictions of what might happen if either Trump or Clinton wins. If Trump wins, she says, “Tax rates [will] decline. Municipal bond yields increase as muni bond prices decline; [this is] not a massacre… just a selloff.” If Clinton wins, then she says, “Tax rates [will] increase. Municipal bonds continue to rally; yields decline to historic lows due to outrageously high taxes.”
  • David Kelly, Chief Global Strategist at JP Morgan Asset Management
    • Kelly states that the government is very divided and even if the promises from the campaign trail are taken seriously, they have to get through Congress, which won’t be easy. His suggestion is to invest more globally, but he also “warns against China, where an aging population doesn’t bode well for an economy that is already grappling with the slowdown of a years-long boom.”
  • Robert Gordon, President at Twenty-First Securities Corp.
    • No matter who is in control, Democrats, Republicans, or continuation of a divided government, tax deductions being limited will most likely be the result. On top of that, it is highly likely that the value of certain tax deductions for high-income households is going to be limited.
  • Paul Hickey, Co-Founder of Bespoke Investment Group
    • Hickey says, “If Clinton wins, it would likely be good for consumer stocks, bad for banks, and good for the overall market.” He also came up with an acronym, IDEAS, that explains what investors’ best bets would be if Trump wins. The acronym stands for: Infrastructure, Defense stocks, Energy, Apple, and Small cap stocks. Trump has repeatedly talked about how U.S. infrastructure needs improvement and he also wants to upgrade the military, which is why investing in defense stocks is a “best bet.” Hickey also says that under a Trump administration, there is a threat of increased geo-political uncertainty, which would support oil prices. For Apple, and other companies with large amounts of cash overseas, Trump would likely be able to work with a Republican Congress to enact a solution that would allow companies to repatriate cash sitting overseas. Small caps have less overseas, so if Trump wins, they will be less impacted by his trade policies.

No one is certain who will win the election, but understanding the impact and consequences of the candidates’ policies can help you position your portfolio appropriately.

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