(Newswire.net — October 8, 2020) — The US election looms large in the foreground of any discussions over the stock market. The lead-up to the 2016 election saw some dramatic movement in terms of stock as well as in the direct aftermath of the voting – and this year looks to be no different. The presidential election will provide the market with uncertainty, but predictable uncertainty to be sure.
Uncertainty is the overriding rule of political unknowns as they influence stock pricing, but this is actually a highly positive sign for serious investors. Uncertainty means a stock price movement at large intervals, and the ability to capitalize on larger gains for those with an eye for analysis. Stock uncertainty also produces greater leverage in alternative investment vehicles that a smart portfolio can take full advantage of.
The Political Intersection
Politics has a way of derailing stock trends. Throughout its history, the NYSE has risen overall by an average of about 9% year over year but this doesn’t mean it hasn’t seen extended bear periods of temporary corrections. Three retractions have already taken place in 2020 alone. Yet the market prevails in an upward trajectory, largely because inflation continues to increase the pricing on all goods from milk to microchips. Businesses become wealthier because people spend more, and so the prices continue to inch higher. Political currents throw a wrench into this otherwise harmonious trend. Politics is responsible for runaway inflation that does not coincide with similar inflation in wealth or savings portfolio value. In addition, politicians sow doubt through their actions and statements on a nearly daily basis either intentionally or accidentally.
Today, ease of access to political messaging means that the markets react faster than ever. Congress has the ability to employ an easy texting apparatus and anyone can tweet from the White House Lawn or a Governor’s Mansion. This causes intense market dips, but also rapid reversals that a savvy investor can buy in on for a lightning deal.
Alternatives
If the market uncertainty is too great, there are other options. Just like the market, electoral politics plays a role in these commodities as well, but through a different means. Gold has always been an interesting investment vehicle for those looking for increased stability to hedge against a bear market. The price of gold trends upward over the long term, just like the stock market. However, gold becomes popular at precisely the moments when market confidence wavers. Gold is best utilized in the buy and hold category of your portfolio, but it’s worth buying if you believe the market to be prepping for a downturn. This is the lead up to a run on gold commodities, beginning another cycle of increasing bullion price.
Many investors seek other means of opportunity, stumbling upon countless ideas and platforms like Yieldstreet, often asking “is Yieldstreet legit?” These alternative investments are as real as any other opportunity, the question is rather where you feel confident in placing your capital. Yieldstreet combines high-value real estate, artwork, bullion, and other alternatives to the stock market that depart from the typical correlation pattern. This means that when the market takes a dip, your investments won’t be affected. They may decrease in value over the short term as well, but for reasons unrelated to market conditions. Utilizing alternatives that are not correlated with stocks is a great way to ensure overall portfolio stability in the event of a long term market shock like the 2008 housing crisis or the oil crash in the 70s.
Evaluating all of your options is an essential part of any investment strategy. However, this is particularly important during an election year when the uncertainty of any party’s chances of winning throw market speculation wild. This makes for a great buying opportunity in the swells of volatility, but also the increased chance of significant losses. Evaluate your strategy and adjust for the best long term gains.