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4 November 2020 / U.S. ELECTION

Bouts of Volatility Possible as Ballot Tally Continues

Amid uncertainty, we are identifying opportunities for clients.

Key Insights

  • States continue to count ballots in order to determine the winner of the 2020 U.S. presidential election.
  • Given the surge in absentee ballots and changes in election procedures during the coronavirus pandemic, we are not surprised that the result is not yet final.
  • We are prepared to manage through various market conditions and remain focused on identifying investment opportunities on behalf of our clients.


Several factors have contributed to slower vote counting in the 2020 general election. In particular, the coronavirus pandemic is expected to have elevated the proportion of mail‑in votes from 21% of the total in 2016 to approximately 39% in 2020—around 80 million votes.1 Mail‑in votes typically take longer to count due to signature verification procedures.

Because each state determines its own voting laws, ballot submission deadlines and the permitted dates for ballot counting vary widely, and many states did not begin the ballot count until after polls closed on Election Day. Consequently, in states where counting is close, results may not be declared for days, if not weeks.

Results will also need to be accepted by both parties. Katie Deal, Washington analyst in the Equity Division at T. Rowe Price, notes that “given that the results in some states could be determined by a small margin of votes, we should expect both parties to pursue every procedural, political, and legal mechanism possible to ensure that every vote for their candidate is counted.”

...we should expect both parties to pursue every procedural, political, and legal mechanism possible to ensure that every vote for their candidate is counted.

- Katie Deal Washington, Analyst, U.S. Equity Division

What Is T. Rowe Price’s Investment Perspective on the Uncertainty?

Over the course of this election cycle, our research and investment teams have monitored the campaigns and policies of the two candidates and have prepared for the possibility of electoral delays.

In the event of a protracted period of uncertainty about the result, some market volatility may be expected. While there may be no historical analogy to this election cycle, contested elections can indeed create market volatility. In the contested 2000 presidential election, the S&P 500 fell 5.6% in the four trading days following Election Day (November 7). The index swung between gains and losses over the following weeks and declined 5.0% from Election Day to December 13, when Vice President Al Gore conceded.2

While short‑term volatility can create distinct challenges for investors, T. Rowe Price’s investment process focuses on positioning for success over the long term, while paying attention to managing risk. We are also focused on the long‑term opportunities presented by short‑term volatility, and we rely on our patient and strategic investment approach to guide us in periods of market turmoil.

Among communications T. Rowe Price has shared with clients, we have published a variety of investment insights related to government actions and the U.S. elections.

...we rely on our patient and strategic investment approach to guide us in periods of market turmoil.

What Further Communications Can I Expect From T. Rowe Price?

As soon as the presidential election result is confirmed, we will share with clients our insights and analysis of the market and investment implications.

In the meantime, our investment, research, and policy teams continue to monitor the situation and markets, and we look forward to sharing more of our insights with you.

IMPORTANT INFORMATION

This material is being furnished for general informational and/or marketing purposes only. The material does not constitute or undertake to give advice of any nature, including fiduciary investment advice, nor is it intended to serve as the primary basis for an investment decision. Prospective investors are recommended to seek independent legal, financial and tax advice before making any investment decision. T. Rowe Price group of companies including T. Rowe Price Associates, Inc. and/or its affiliates receive revenue from T. Rowe Price investment products and services. Past performance is not a reliable indicator of future performance. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested.

The material does not constitute a distribution, an offer, an invitation, a personal or general recommendation or solicitation to sell or buy any securities in any jurisdiction or to conduct any particular investment activity. The material has not been reviewed by any regulatory authority in any jurisdiction.

Information and opinions presented have been obtained or derived from sources believed to be reliable and current; however, we cannot guarantee the sources’ accuracy or completeness. There is no guarantee that any forecasts made will come to pass. The views contained herein are as of the date written and are subject to change without notice; these views may differ from those of other T. Rowe Price group companies and/or associates. Under no circumstances should the material, in whole or in part, be copied or redistributed without consent from T. Rowe Price.

The material is not intended for use by persons in jurisdictions which prohibit or restrict the distribution of the material and in certain countries the material is provided upon specific request. It is not intended for distribution to retail investors in any jurisdiction.

USA—Issued in the USA by T. Rowe Price Associates, Inc., 100 East Pratt Street, Baltimore, MD, 21202, which is regulated by the U.S. Securities and Exchange Commission. For Institutional Investors only.

Morningstar Awards 2020©. Morningstar, Inc. All Rights Reserved. Awarded to T. Rowe Price for 2020 U.S. Morningstar Exemplary Stewardship and to Jerome Clark for 2020 U.S. Morningstar Outstanding Portfolio Manager, U.S.A.

© 2021 T. Rowe Price. All rights reserved. T. ROWE PRICE, INVEST WITH CONFIDENCE, and the bighorn sheep design are, collectively and/or apart, trademarks or registered trademarks of T. Rowe Price Group, Inc.

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