As the U.S. House of Representatives impeachment proceedings move to the Judicial Committee, the rhetoric is ramping up – both around President Donald Trump and his opinion of what could happen to the stock market (read: your 401k) if Democrats are successful in their efforts to hold him accountable for alleged improper actions.
But this is not the time to embrace Chicken Little. The sky is not falling. It will not fall, at least not as President Trump believes. The reality is that investment pros – the ones who makes money for a living – say Americans should not worry about the health of their retirement plans.
There is historical data to bolster their optimism. When Richard Nixon faced impeachment in 1974, the S&P 500 had lost almost half of its value by the time the president resigned. However, there were extenuating circumstances: Forty-five years ago, the U.S. economy was facing an oil crisis, high inflation combined with high unemployment, and a recession.
More recently, when Bill Clinton faced impeachment, the S&P 500 dropped almost 20 percent during the hearings and rallied to make up the losses and even gained ground by the time he was cleared by the Senate in early 1999.
As the impeachment hearings continue – even if President Trump faces a trial in the Senate – many experts believe the stock market may drop in the near term 10 to 30 percent. Still, the economy is strong and everyday investors should not gamble their 401k based emotions (or worse, a gut feeling).
Also, if President Trump is removed from office, there are some who contend the markets would be more stable under Vice-President Mike Pence. The reasoning is that Pence would not change any of the current policies.
The economy is strong. Earnings remain strong. As long as companies are making money – and they are – it underlines the fact that the stock market does not care if President Trump is impeached, whether he wants to realize that or not.
Much like the law, where no man is above it, no man is responsible for the markets and their ebbs and flows.