There’s a known theory that states the stock market tends to be very weak during the year following a presidential election in the U.S. Many investors tend to follow this theory with a very close attention during those periods of time.
Generally, as we might anticipate, the stock market usually tends to produce some good results when investors think the election’s winner will be good for their investments. And if they think the new president won’t bring them good results economically, then they won’t be as interested in investing.
According to some studies conducted by various experts, the stock market initial movement followed by the next day of an election tend to be a good predictor of what the market will bring investors in the future weeks to come.
If this theory proves to be always true, then we may have some bad days ahead of us as the stock market didn’t do well in many sectors in the day followed the election. For example, gun company stocks plunge day after Donald Trump’s victory. Should we predict the future based on this result and the likes?
In the case of this new elected president, Donald Trump, what could we expect to see in the stock market? These are some very interesting questions, but could they really be answered?
It’s impossible to actually put some clear responses with these questions because we’ll have to wait and see. Although many theories has shown what investors like us can expect to happen, they aren’t usually correct. Therefore, it’ll be hard to really know what this new president’s term will bring to the stock market.
However, we all know that Trump is a businessman who happens to know how to make profits. He has created a very successful company, although some may question his success due to his involvement with the law. He has been in many lawsuits, but the reality is what matters to us in the stock market, he knows how to make money.
Will he be able to apply his techniques learned over the years from business to the economy? Again, we don’t know, running a country is a total different thing from running a business.
It doesn’t matter what you’ve heard before about this because there’s totally no similarities between the two. In fact, he’s not even a politician. Not being a politician can either be a good or a bad thing for us, but it’s still something we’ll have to find out with time.
The stock market movements are closely correlated to the those of the economy. Meaning that if we’re seeing good results in the economy, we’ll be most likely to also see good results in the stock market. But if it’s not going well for the economy the same thing would most likely be found in the stock market.
With that being said, we’re all hoping for the best. That’s the only thing we can do now as we have no idea as of what’s going to happen in the near future with this new government and the stock market.
Keep researching before you trade and trade without taking too much risk. It’s a good habit to always utilize the stop loss feature, it can save you a lot of money.
Now that I’ve given my opinion, what do you think will happen to the stock market with this new elected president?
Please share your own opinion with us in the comment section bellow.