However, for those of us in the investment world, the situation is becoming less and less fun. At the time of writing, the US financial markets have become gloomier as the legal battle for the White House enters a more frantic phase where the clear conclusion is less apparent. One way to address this question is to look at historical precedent. Any comparisons between what has happened in the past and the current situation must be taken with a large pinch of salt, not least because it is impossible to isolate the effect of political uncertainty from the other important economic influences. However, such comparisons can sometimes be instructive.
Lets start at the beginning.
The dispute over who had won the electoral vote was only resolved in favour of the Republicans when they agreed to discontinue military presence on the Southern states. Moreover, equity levels continued to be mixed for some time after the new president was announced. Although the vast majority of this decline was due to unrelated factors, most notably rising oil prices, consumer sentiment was certainly affected and prices continued to fall after Nixon's resignation led to White House confusion. In contrast, the markets all but ignored the recent Clinton - Lewinski affair. True, this was, for the most part, played out against a backdrop of strong economic growth and one of the longest bull markets this century.