Elections always have a way of stirring things up, especially when it comes to your investments. Fortunately, the recent Indian general elections didn’t disrupt our portfolio much, even if the results didn’t align with expectations too much. However, there’s another major event on the horizon—the U.S. elections—which could bring more uncertainty. This time, it’s not just your portfolio; even the global market could feel the ripple effects.
This newsletter kicks off a series where I’ll break down everything you need to know about U.S. elections and how they work.
So let’s get started with the basics.
Only 2 Parties Contest For U.S. Presidential Election – Unlike India
The U.S. political landscape is dominated by two major parties: the Republicans (Conservatives) and the Democrats (Liberals). Have a look at the comparison below –
Even though the U.S. has two main political parties (plus a few independent candidates), the election process is far from being simple! Let’s start from the beginning.
Candidates declare their run
First, potential candidates announce that they want to run for President under the Democratic or Republican banner or as an Independent. These are usually well-known politicians like governors, senators, former officials or even prominent businessmen.
Primaries & Caucus: Where the Race Begins
Each state holds either Primaries or Caucuses or both, where members of that political party (either Republican or Democrat) vote for the candidate they want to represent their party.
- Primaries: It’s like regular elections where people vote privately.
- Caucuses: These are public meetings where people discuss the candidates and then vote in groups.
The goal is for candidates to win ‘Delegates’. Delegates are party members who represent their state at the party’s national convention and are pledged to support the candidate based on how the state voted.
National Conventions: Where Candidates Are Crowned
This is an event where each party officially nominates their candidate for the president. Each candidate needs to secure a specific number of delegates to win the presidential nomination. Let’s take the current presidential candidates for an example:
-
- Kamala Harris (Democratic) needed 2,350 delegates to win
- Donald Trump (Republican), needed 1,215 delegates to win
The winning candidate also announces their ‘Running Mate’ (the person who will be vice president).
Recently, Trump chose J.D. Vance, a senator from Ohio, while Kamala Harris selected Tim Walz, the Governor of Minnesota, as her running mate.
Note: After Joe Biden withdrew from the presidential race, he, along with other prominent Democratic leaders, endorsed Kamala Harris’s nomination. Ultimately, 4,567 delegates cast their votes in her favour.
With the nominees selected, the general election campaign begins, and the race to win as many votes as possible heats up. This is where Joe Biden fumbled and Donald Trump almost lost his ear and life.
General Election: Voting for the President
The main election, called the general election, happens every four years in early November. People across the country vote for the President.
When people vote in the general election, they’re actually choosing a group of people called ‘Electors’ in each state.
Each state has a certain number of electors based on its population. Bigger states have more electors.
Most states are winner-takes-all which means if one candidate wins by 51% of the votes, that candidate will win all the electors in that state.
This is very different from how it happens in India. Let me explain:
In the recent Indian General Election, the Samajwadi Party (SP) won 37 out of 80 seats, while the BJP secured 30. Under the U.S. ‘winner-takes-all’ system, the SP would have taken all 80 seats
A candidate needs a majority of the 538 total electors (at least 270) to win the presidency.
Here’s a fun fact: Back in the 2016 election, Clinton won the Popular vote i.e. she had ~2.9 million more votes than Trump and yet he won the presidency since he won more electoral votes.
You might be wondering how! The reason lies in the term called ‘Swing States,’ which we will discuss in the next newsletter!
I hope this has helped you better understand how US elections work. In the coming weeks, we will also explore how US elections impact the markets—and what you can do to prepare. Stay tuned!
Till the next time,
Vijay
CEO – InCred Money
P.S. I share my thoughts on Investing and the Economy regularly. You can follow me here.
