Stock Market Performance After Presidential Elections

It seems likely that the Presidential elections are headed for a nail biting finish.

From a stock market perspective, it's likely that volatility will be high this week. Further, it makes sense to avoid fresh exposure to the markets immediately after elections.

My point is underscored by the fact that equity markets have under performed after elections irrespective of the incumbent party winning or losing.

However, if we look at the historical market performance one year after elections, the trend has been positive.

Therefore, investors can wait in the sidelines and consider fresh exposure to equities after some correction.

I would also like to mention that Europe is already facing another lock-down due to the coronavirus. Once the elections are over, the focus will shift to the economic impact of another lock-down.

Therefore, I believe that markets look ripe for correction in the coming weeks. A 10% correction would be a good opportunity to accumulate attractive stocks.

For now, remain invested in low beta stock, increase cash exposure and consider precious metals.