Investors get fearful ahead of a big election because the outcome is unknown. Unknown risks are what investors fear most. Now that the result is decided, we have known risks to deal with.
Investors were also fearful ahead of the 2012 election, which also had a surprising (for some) result. Recall that Gov. Romney had been up by 1-4% in the last polls leading up to that election. Polling that year was admittedly disrupted by the arrival of Hurricane Sandy, which also shut down the stock market for 2 days.
Read What Investors Can Expect From the Trump Revolution
And interestingly, the market now is doing a pretty good imitation of the path of price movements 4 years ago. In 2012 there was a dip into mid-November after the Nov. 6 election. This time it was a dip the week before the Nov. 8 election. But in each case, there has also been a strong rebound after that dip.
You may have heard before that having a Democrat president is better for the stock market than having a Republican president, and there are statistics which can be used to support that. In the following chart, the averages for each category since 1933 are plotted:
This post was published at FinancialSense on 11/11/2016.
Follow on Twitter
Recent Comments