Invest: Before/After the Election?
Two articles came across my desk this week connected to different aspects of the stock market and the upcoming presidential election. This first points to markets already “pricing in” a Trump victory and the other asking if it’s best to invest in the stock market after the election.
Everyone runs on the economy and believes that theirs will be better for people than their opponents. Higher wages, lower taxes, reduced costs and more jobs. Both sides position this and have very different ways they want to accomplish it.
So what does it mean that the market is already pricing in a Trump win? Wall Street takes bets, maybe more than we would care to know. In this case, analysis shows that many are planning for the economic policies of a second Trump presidency in order to profit from that possibility. One example is the effect of tariffs on foreign investments and what that could do locally to the economy. If you are an investment strategist for a large financial firm and you believe Trump will win, you plan accordingly. Likewise, a Harris presidency would require certain economic bets based on how policies could play out.
But what does this mean for individuals and investing? The second article connected to this idea asks the question about investing now or after the November election. The MSN column is a response to a reader with some pretty good advice about this. In short, it doesn’t matter because trying to time the market is widely believed to be a fool’s errand. You cannot know and so you take the advice of Yoda and you “do or do not.” The market is less connected to the sitting president and the election cycle than we realize - though it is where we heap most of the blame. Candidates and media would make you think it is the only thing that matters and somehow overnight a new market and new economy get installed.
I prefer to think of it as a software update that downloads overnight to tweak a bug or two but 99% of the operating system is unchanged, gradual and you might not even notice.
The MSN article does make it clear that your individual situation should be the gauge for how you proceed with your financial planning. The stock market may be the right place or it could be devastating which is why generic strategies and advice are seldom the right option all the time.
Here is a link to the Fortune article.
https://finance.yahoo.com/news/wall-street-already-priced-trump-010400215.html
Here is a link to the MSN article.
As always, if you come across a financially related article you’d like to send my way please do!
Best place to send them is to me.
More next time!
Jonathan