Wednesday, November 4, 2020

Stocks Markets Go Nuts! Election Excitement?

The Dow Jones Industrial Average up more that 705 points on pre-election expectations. The Nasdaq Composite Index and S&P 500 index were also up. The animal spirits are moving and investors are feeling good about investments right now. They may also be creating a trading bubble to see what might if one candidate over another.

What I find interesting is that the scenario hasn't changed. Either one or the other will win....nothing has changed unless some third party candidate sweeps through to the White House. One theory I heard is that investors may want a near tie. 

In this idea investors may be saying they want one party to control the senate and another to control the White House as a check and balance. Typically that means not much will get done and perhaps this is the scenario they are looking for. 

We have no radical changes in the market, tax deductions are not rolled back, there is no raising of taxes, etc.. etc... etc... Basically nothing gets done and that create a level of stability. We become more stable and less nimble. Sort of an equilibrium which is great during peace and not so great during times of change. 

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