Impeachment—What It Means For the Stock Market

House Speaker Nancy Pelosi on Tuesday announced a formal impeachment inquiry against President Trump. To no one’s surprise, the stock market took a nosedive in the aftermath of the announcement, leading business owners and shareholders alike to wonder how this will impact their bottom line.

Jim Cramer discussed the topic on Mad Money, making a point of highlighting how the markets survived the last time this happened.

“We have something else to worry about. We have partisan acrimony per share.”

Mr. Cramer went on to highlight that—in the wake of revelations that President Trump may have tried to pressure Ukraine into investigating a political rival—Democrats seemed determine to impeach Trump, sending articles of impeachment to the Senate.

“Before you freak out, for those of you who don’t remember civic classes, let me explain. Even if the House impeaches Trump, you can’t remove a sitting president without a two-thirds majority in the Senate. So until the Democrats can convince at least 20 Republican senators to turn on their guy, impeachment remains a sideshow.

“Still, I get why people sold today. It made a lot of sense. We haven’t seen this level of partisan acrimony in the United States since the Civil War. And when things in Washington turn hostile, that can and always will hurt the stock market.”

Despite the potential for stocks to take a beating, Cramer sees a silver lining. Ultimately, with the Senate under Republican control, the likelihood of impeachment leading to anything is virtually nil.

“The Senate will most likely acquit. How much will that matter to the stock market? You know what? We’ve seen this movie before. When the Republican House of Representatives impeached President Clinton, everyone knew he’d be acquitted in the Senate. So how did the Clinton impeachment impact the market?”

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Cramer goes on to highlight how much the stock market dropped when impeachment proceedings were announced against Clinton, with the Nasdaq and tech stocks bearing the brunt. However, as Cramer points out, the market quickly recovered with tech leading way and showing some of the biggest gains.

“If you let the impeachment story shake you out of the market, well, guess what happened? You missed one of the greatest moves of all time….Every pullback during that period—every one—was a buying opportunity….If this turns out like 1998 all over again, then you may want to buy at the moment of maximum rancor.”

The message is clear: While stocks may take a short term hit, over the long term, impeachment may represent a significant economic opportunity.

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