I think if you are concerned about election risk, you are best off selling now rather than waiting for the post-election volatility.
Covered puts are a good way to mitigate risk, but as the election draws closer, this type of insurance grows more expensive and you will do better in most cases just by cashing in now or waiting it out.
Goldman Sachs thinks the stock markets would do fine with Biden and a DEM Congress, for what it’s worth.
“i am currently figuring that the worst is if biden wins or the outcome is placed into limbo pending recounts.”
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There will be “civil unrest” no matter who wins; looters, arsonists and anarchists will take any excuse they can get to go at it.
Keep that in mind in your planning, at least the immediate/short term.
The market started going up like a rocket right after Trump won in 2016. It actually started rising the 2 trading days prior to the election, which suggests the smart money knew Trump would win. The bottom line is, the market looks ahead. Trump being in office till January means nothing.
OTOH, the conventional wisdom for months has been that Biden is going to win, and the market has kept going up. That indicates the market is comfortable with Biden being President. Wall Street is giving him tons of money to lie about Trump after all. That should tell you something.
If you have a platform like TDAmeritrade’s Think ‘n Swim that keeps you stop loss order private until your condition is met. If a market maker can see your order they will take your stock.
The stock market is based on anticipated future earnings, not on actual results except to the extent that we expect past performance to be an indicator of future outcomes.
So the stock market is not going to wait for businesses to report on losses caused by Biden’s shutdown before going down — nor will they wait for the Biden shutdown to actually start. Any loss caused by Biden will be on election day or possibly even before if it becomes apparent that the electoral predictions are accurate.
If a stock is 100 and you set a stop-loss at 90 ...
If it opens the next day at 70 you will sell at 70.
If you set a stop-limit at 90 and it opens at 70 it may not execute.
My take is that doesn’t matter.
Boomers are pumping up the market with retirement savings.
The bubble will pop when the big retirement plans start paying out
More than they take in. Ironically COVID may have pushed this date
Out some.
I have to think that folks will harvest gains at current cap gain rates with a rate hike and possibly mark to market taxation if Biden wins and the House doesn’t flip.
I never hold a position during a big news event that might effect it. Just take the money out of the market and cancel my limit orders until the event and its immediate aftermath are over. Stop losses can be gapped right by if news is against you. If you know what your doing in trading you don’t want to throw in wild gambles.
I don’t think the stock market cares much about the election. Civil unrest will happen unless the election mandate is clear. But it will be transitory. Whoever wins will get some sort of stimulus passed and there will be a lot of resistance to increasing taxes. More likely the market may have issues in 2021 and 2022 as the impact of the shut down of the small businesses and travel/entertainment industries will start to bite as the stimulus wanes. Some of these changes are going to be irreversible or very slow to go back to the original level.
There is a consistent historical pattern of an October sell-off prior to presidential elections, followed by a post election recovery. If you want to play for that, now might be good time time to sell high valuation stocks, wait for the dip and buy back in after November 3. I am doing some of that, also buying QQQ November 20 puts.
Some of the reaction will be determined by whether Biden wins and carries the Senate to turn Democrat while retaining a Democrat House majority. This would be the most damaging because they would eliminate the filibuster and reverse the Trump tax cuts and capital gains rate reductions.
Any result that creates another 4 years of divided government would probably result in a big market surge since government (other than the Fed) would be neutered from doing any harm.
My own theory is that anything you try to do is probably already priced into the market and in the long run the levels of the market are driven by expectations for future earnings which are controlled by consumer behavior, not government. Some sectors may be pressured like drug, defense, and oil companies but even Biden understands without tax revenue and growth his administration is doomed.
I have more faith in greed than I do in Joe Biden or any Democrat keeping their word to their voters.
Stocks price in the next 5 years.
I don’t use stop loss orders because I find the market makers see them and blow through them on a quick dip to wipe out the small investors/suckers.
I’m puzzled by this. If it looked like Biden won, or was even possibly able to win, why would you wait until January to sell? Would you really bank on investors holding until Biden was sworn in? When he’s promising nearly a trillion in more taxes?
I’d be out of the market as swiftly as possible. I’d have to assume at least a 20% drop in dividends and profits (and quite a bit more for industries that liberals love to attack) as you know Pelosi has a drawer full of Obamacare-esque bills waiting to push through if they somehow manage the trifecta of house, senate and presidency.
Add in the promise for virtually shutting down the country again, we’re talking the 20% drop from late summer earnings, not current earnings.
That’s deep recession territory with a decade to claw out.
Nahh, man, a Biden presidency will be fully priced into the market no later than the 7th of November. And then the sheeple will then take their money out of the market.
Bkmk
anyone have a good stock pick for now? you can pm me if you like.