The widely anticipated first official debate of this presidential election has come and gone, leaving a wake that has been keenly felt in the markets. In the polarizing battle between Hillary Clinton and Donald Trump, the market has already chosen its champion. Most large financial institutions are fearful of the unpredictability a Trump presidency would likely bring, and many firms have donated preferably or exclusively to the Clinton campaign. To the delight of many of these firms, Donald Trump is considered widely to have put up a lackluster performance during the first debate, while Clinton performed well as the seasoned political animal she has learned to be. With public perception favoring Clinton in the aftermath of the first debate, markets felt a significant tug upward as investment positions were shifted to account for the evolving probabilities of a Trump vs Clinton presidency.
So with the two least popular presidential candidates in living memory both trying to throw each other under the bus, what do the next two months hold in store? And more importantly, is it possible to still make money when the market is running up and down based on poll numbers? History tells us markets tend to rise in election years, but in a year where presidential discourse has devolved into polemic and diatribe, the campaigns may end up slashing and burning each other until there’s nothing positive left to say about either candidate.
For investors, what is important is to have a sound and adaptable investment strategy. Understanding the relationship between the market and your investments is key to ensuring your portfolio will be able to withstand the ups and downs of a volatile market while guarding and growing your money. It’s especially salient in the current election climate to maintain a stable portfolio; trading on emotion and chasing the market is one of the most sure fire ways to lose. Don’t fall into the trap of reacting to every movement and you’ll be much better off.