Thomas Peterffy: Markets to Plunge If Democrats Win, Soar on GOP Win

Billionaire Thomas Peterffy predicts that the stock market will plunge up to 15 percent should Democrats take the House and Senate in the midterm elections.

The founder and chairman of Interactive Brokers, one of the nation’s leading digital brokers, says the market will surge back to record highs if Republicans retain control and ward off a Blue Wave on Tuesday.

“If the Republicans win, the market is not going go down. The market is going to go up,” he told Newsmax TV in an exclusive interview.

Peterffy, who fled Communist Hungary in 1965 and landed in the United States with a single suitcase, is now No. 22 on the Forbes 400 billionaires list, with a net worth of $18.5 billion.

He outlined three scenarios for market reaction to the midterms:

• The market will tumble about four percent in the wake of a split decision with Democrats winning the House and Republicans retaining power in the Senate.
• Stocks will plunge 10 percent to 15 percent should Democrats take both the House and Senate.
• The market will soar close to new record highs should Republicans retain power in both chambers.

Peterffy also expects some volatility in the futures market on election night, just like after Donald Trump’s stunning 2016 victory. “I picked up the phone and started to buy futures contracts when I saw the market plunging,” he recalled. 

“The same thing will happen Tuesday except this time people get it right,” he said. “If you're quick on the draw, you can still make some money.”

In a wide ranging interview, Peterffy also said:

• The stock market will remain “very volatile” due to such headwinds as the Federal Reserve Board raising interest rates and the fight with China over tariffs. “The market is extremely nervous and fidgety,” he said.
• The U.S. economy “is really booming” while global rivals like China and Europe and the emerging markets battle “decelerating growth.” He sees “a tug-of-war of whether the U.S. rise in economic activity can counterbalance the downward pressure of the rest of the world.”
• The China trade tariff battle is a necessary evil. “Both sides are going to suffer. The U.S. is going to suffer less than China in this dispute, so therefore we are at a point now where we can afford to have the fight," he said. "The fight is necessary and it had to come sooner or later because China is really taking advantage of our economy, especially as far as stealing intellectual property,” he said. “It's very difficult to do any business with them because they just take the intellectual property and they reproduce it,” he said. “We have to have this fight. Now that the U.S. is economically so strong, it is the right time to have this fight because we can take some losses. If this fight resolves itself in a fairly short period of time, then this is going to be a huge positive” for America’s economy. However, he said “the Chinese can just bite their lips. It's communism so they can do whatever they want to the people. It doesn't matter how unhappy people will become as long as there is no uprising. They can just hold the line.”
• As far as the Trump administration’s handling of the economy and trade policy, Peterffy would give the president a letter grade of A-plus.
• He fights to protect personal liberties from the encroaching socialism of the federal government. Born in Budapest in a hospital basement during a Russian air raid, Peterffy lived under Communism with his divorced mother, grandmother and an uncle who had been held in a Siberian prison camp. “Socialism is an absolutely wonderful idea for people who have never experienced it. Those people who experience it know how horrible it is. It's regular, literal daily suffering where you are not free to do anything.” You can’t cite “an example where socialism prevailed and succeeded and where people are not enormous unhappy,” he said. “Socialism is an intolerable system.”