What a year we have had in the market. The year started great and then the market tanked as The Corona virus spread in March. The big bounce we have had and a weak September.
I have tried to give you frameworks to help you play the market. On Twitter I have told you Quarter 3 with its earnings season rally in July and a poor September a classical quarter.
As you all know 2020 is about the US Presidential Election and with its political and economical implications. This time it is all about Trump vs Biden. Biden is ahead in the polls and Trump seems to be the underdog.
Last election Trump catched up the last days before the election. In 2016 many believed the market to slide if Trump won but history shows it ended up otherwise. We had a great rally post election.
One of my favorite investors Warren Buffett, the Oracle of Omaha, has a saying. «What we can learn from history is that we do not learn from history.» I have tried to convince you into using historical knowledge about markets plenty a time.
In the chart above you see an average election and ordinary year in the market. What you can see in a typical election year is a rally the 2nd half of the year, a week September, a hesitant market pre election, and a rally after. This chart I presented to you in the last election in 2016. Those who believed in history to repeat itself with a big rally post election cashed in big time.
Above I give you this year’s market. As you know we have had a great rally this year as in a typical election year and a poor September and now it seems the market a bit hesitant as well. The chart over a typical election year seems to be helpful this year again. Those played the market as election years use to behave have been wise.
Last time around in 2016 I gave you the advice to buy with both hands if the market starting rallying post election. My blog readers back then have experienced a major rally all from the election and I hope they followed my advice and bought in.
This time around I will come with similar advice. Buy in if the market starts rallying whether Trump or Biden wins. Something you must consider this year we are in the midst of a Pandemic. If economies shut down cause of the virus the market may plunge again. But this blog is how to play the election. Perhaps we should listen to investors like Buffett who suggests to believe in history to repeat itself.
Buy in and ride the bull if the market post election takes off. This worked out all right 2016.
Good luck with your investing.