Government Shutdowns: More Market Noise Than Market Risk
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Kim Inglis, Senior Portfolio Manager at Raymond James, explains why U.S. government shutdowns historically have little lasting impact on markets, noting that even the longest shutdowns have been followed by quick equity rebounds and average S&P 500 gains of more than 2% around shutdown periods.
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Hi, I'm Kim Inglis, Senior Portfolio Manager with Raymond James. Shutdowns are seemingly a fact of life these days, and whenever they happen, they obviously make investors a bit nervous, which is understandable, of course. However, historically, shutdowns have not really been a cause for concern for investors, so the chart that I've got here for you today has got all of the shutdowns that have happened since 1990, and the red bar there shows when the shutdown occurs, and you'll notice that the lines beforehand represent the 20 days before the shutdown, and they're often markets can be a little bit bumpy, and then the lines afterwards, you'll notice that they tend to be generally positive or neutral over the average over those 40 days, so the 20 days leading up in the 20 days after has actually been a 2.2% gain, so some good news during some uncertain times.