The US elections are being watched closely around the world including in Malaysia. Should one go in the markets now? Should you sell your current holdings?
Update: 3:30pm Trump has won presidency; Republicans won US Senate & US House
Update: 9:15pm Moving forward with the market
Question: Should one go in the markets now? Should you sell your current holdings?
Answer: It depends (seriously!)
Many folks have been staying away from the markets until after the results holding cash or for those fearing a crash, even parking money into gold. This is one of the reasons why the market has been largely subdued & the SPY has been trading sideways.
US Presidential Elections
Trump has won presidency; Republicans won US Senate & US House
Mid way election results as of 12pm (Malaysian time)
Buying
For mid-long term investors, the downside potential risk is potentially higher if Trump wins VS the market gains if Clinton wins as market through mainstream media influence has largely already priced in her victory.
Updates: US Markets & USD has plunged & Gold risen with Trump victory
For long term investors though, you could arguably don’t really care as long as the company meets your criteria (i.e. fundamentals analysis) & the current price is acceptable to you. You’d go in anyway without really caring where the market would move. As what seems like big fluctuations short term is smooth like a baby’s butt if you look at it from a long term zoomed out perspective.
For short term traders, you would want to have locked in your gains (or at least break even) by either closing your positions or by putting in/moving your stop losses. If you had mostly short trades, you would put in a few long trades to hedge your bets in case the market moves in the opposite direction (or vice versa).
Selling
For mid-long term investors (as Trump looks to be heading for a victory), many are looking sell off most current holdings before further drops & look into re-entering the market upon recovery.
For long-term investors, most are watching the elections with interest but not doing any major sell-offs. Maybe to sell one or two under-performers. As in the long term (like when you were buying), you are not ver concerned on short term movements of the market.
For short term traders, you would have likely already have hit or close to hitting your stop limits by now. Some greedy traders may move their short positions further in anticipation of further market drops. Increased market movements instead of sideway trending will be a welcomed by most short term traders.
Moving Forward with the Market
There was a knee jerk reaction in many markets particularly pronounced in Asia (especially Japan).
USD dropped, Mexican Peso crashed, gold went up, Dow Jones Futures dropped 5%.
BUT Trump has quickly closed ranks talking about growing the economy (re: Make America Great Again) & assured that US would deal fairly with other countries.
After the knee jerk reaction (where short sellers will be grinning with their gains), investors will realise that it’s business as usual & markets expected to recover. And it may be a good if somewhat very short window of opportunity for buyers to purchase good stocks at discounted prices. (Update: US & global markets have rebounded quickly & moving upwards).
More Reading
Donald Trump’s run to victory (WashingtonPost)
Share & discuss on the US Presidential Elections & your investment decision-making
Leave A Comment