The Presidential Election

The intention of this blog post is to find ways to play the US Presidential Election.  Last election when Barack Obama won we had a great rally in the markets.  What about this election?

The Dow Jones the last 5 years
The Dow Jones the last 5 years

It is not hard to see the markets have been a bit cautious running up to the election.  You can even see a hesitant market prior to the last election in 2012.  This is a typical pattern.

What happened in 2012 was a little selling pressure before and a rally after the election.  In my book this is a typical reaction in the markets.

djia-election-year-return

I give you this chart. It shows a hesitant market pre elections and a nice rally post Presidential Elections.  Some believe in such a market if Clinton wins, some a little more uncertain in the case of a Trump surprise.

One way is to believe in the typical pattern outlined above.  Buy the day before and sell in a rally post election.  In my view this approach has a little bit of an overnight gambling aspect.

What if the markets tank the day after, which some forecast if Trump wins.  This is a case to wait out the situation and buy in before a bounce.

A wait and see approach could be best.  If we get a rally like in 2012 one has ample time to buy in and cash in selling on the way up.

Some say the market in 2012 was an exceptionally good market.  One must remember this was a market colored by the post Financial Crisis.

Either way you play it Presidential Elections give traders and investors a great chance to make good investments.  Good luck.

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