The old saying goes: “Markets like good news. Markets dislike bad news, but markets hate uncertainty.” The 2016 presidential election has been described as a choice between the lesser of two evils, but it’s also a choice between degrees of uncertainty.
Growth in the classic car market has slowed measurably over the last 18 months. Uncertainty around the presidential election, the Chinese economy, Brexit and the increasingly unstable geopolitical situation has undoubtedly caused a number of potential buyers to sit on their hands, preferring to wait to see how things shake out.
Should Republican candidate Donald Trump win the election, it seems logical that this trend will accelerate and the classic car market will at least in the short term, quiet even more. The markets while essentially apolitical, loathe change and Trump, love him or hate him, personifies it.
The equities markets could react negatively to a Trump victory. According to a CNBC article by Evelyn Chang, published yesterday, the consensus among Wall Street insiders is that the S&P will likely sell off on a Trump win and at least maintain their position with a Clinton win. With last Friday’s close, the S&P experienced its first nine-day losing streak since the 1980s. This coincided with Trump’s resurgence in the polls.
A win for Democrat Hillary Clinton, represents, to the markets, a lesser degree of uncertainty – a continuation of current policies that have brought growth (albeit of the unspectacular variety) in the U.S. economy and unemployment near or below five percent.
But a Clinton win does little to address uncertainty and instability of the geopolitical kind. It is well known that she and Vladimir Putin, the Russian Federation’s president, despise each other. And we still have no idea whether China’s economic slowdown will be a hard or soft landing, nor do we know what effect Brexit will have on the UK and European Union economies.
Regardless of this election’s victor, its conclusion only removes some of the uncertainty. In the longer-term, continued uncertainty might actually inspire a rush to tangible investments that could eventually favor the classic car market, but it’s difficult to imagine a return to the growth seen in classic cars values between 2011 and ‘14 any time soon. There are just too many unknowns on all fronts.
While great cars that are fresh to market and represent unrepeatable opportunities will continue selling, and probably quite well, the rest of the market is going to be tough to call. We’re likely in for a fair amount of volatility in the classic car market over the next several years regardless of which candidate wins tonight.
(Editor's note: Now that Donald Trump has won the election, there is a bit more clarity; however, overnight equities fluctuations saw Dow Jones futures drop by over 700 points, before rallying to a 200-point gain by 2:00 P.M., eastern time on Wednesday, Nov. 9. While we can relax for the moment, there is still a while before Trump’s inauguration and his tone will set the markets’ mood moving forward. As always when buying, make sure you research as much as possible and try not to rush in.)