[2024 Alternative Investment Forum] "Understanding Paradigm Shifts Is Essential Beyond Predicting US Presidential Election"

Special Lecture by Dr. Kwak Sujong, PhD in Economics
"The Presidential Election Is Only a Short-Term Uncertainty, with Minimal Impact on Long-Term Returns"

"Regardless of the presidential election results, the US market has risen. What investors need to consider is the paradigm shift driven by key stakeholders leading artificial intelligence (AI), the energy industry, and others."

Dr. Kwak Su-jong, an economist, emphasized this during a special lecture titled "Capital Markets After the US Presidential Election" at the 2nd Asia Economy Alternative Investment Forum held at the Conrad Hotel in Yeouido on the 12th.

Dr. Kwak Su-jong is giving a special lecture on the topic of "Changes in the Capital Market After the U.S. Presidential Election" at the 2nd Asia Economy Alternative Investment Forum held on the 12th at the Conrad Hotel in Yeouido, Seoul. Photo by Kang Jin-hyung aymsdream@

Dr. Kwak stated, "Since 1929, there have been only three instances where the S&P 500 recorded a negative average annual return during a specific president’s term in US stock market history. The average return exceeded 9.5%," adding, "Unexpected events that occur regardless of the new president’s party affiliation affect the stock market, but no administration has had a significant impact on the market."

However, Dr. Kwak stressed the need to be cautious of volatility occurring before elections. He said, "Historically, stock market volatility tends to increase in the months leading up to elections," explaining, "This is a natural phenomenon because the market dislikes uncertainty." He further explained, "Market returns in election years have been superior to those in non-election years," attributing this to the resolution of uncertainty.

Dr. Kwak advised that there is no need to necessarily change asset allocation after the presidential election and the inauguration of a new president. He said, "Statistically, long-term investing has been a better choice regardless of who is in power," emphasizing, "The key is not timing the market but staying in the market for a long time."

He continued, "From an investment perspective, trying to predict the future is meaningless. Making significant changes to investments based on election results is particularly risky," pointing out, "What is important for investors is to consider what paradigm is changing due to key stakeholders leading AI, the energy industry, and others."

Finally, Dr. Kwak suggested the role the media should play in the rapidly changing financial market. He said, "Ahead of the presidential election, the media should provide insights that allow people to imagine the changes the financial market will undergo and the newly emerging industries, rather than simply delivering content to attract investors’ attention," proposing, "Through this, investors can consider industries where Korea can independently strengthen its capabilities and have advantages in relation to major powers such as the US."