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3 Mistakes Investors Make During Election Years

  • Jan 8
    The US Presidential Election 2020 is near and often this causes
    anxiety for many retail investors. And we all know when our emotions are
    in play, we tend to make many stupid and unnecessary mistakes.To get
    more news about WikiFX, you can visit wikifx official website.

      Today let’s touch on the 3 Mistakes Investors Make During Election
    Years in hope that you will be aware of them, and more importantly not
    fall for them.

      #1 – Overanalyzing which party will win

      It’s interesting to follow and dip our toes into forecasting who’s
    gonna win this coming election – Biden or Trump. And you might even have
    your personal preference on who you favour as the upcoming US

      But while we can do all the analysis and prediction, as traders and
    investors, we always follow the mantra that “the market is always

      If we were to look all the way back to 1933 when Franklin D. Roosevelt
    took the presidential office to date, the stock market (S&P 500)
    have trended higher regardless of which party has been in office.

      So while some of us gonna have our own side bet on who’s gonna win
    this election, don’t forget to also keep your bet on the stock market

    #2 – Too worried about volatility

      Markets hate uncertainty, and that causes volatility. There will
    certainly be higher volatility in the market this coming election, and
    it’s definitely very important that as traders and investors, we are
    aware of such volatile seasons and take precautionary measures.

      But at the same time, it is also because of such volatility, opportunities arise in the market.

      “When everyone is worried that new government policy is going to come
    along and destroy a sector, that concern is usually overblown,” Lovelace
    says. “Companies with good drugs that are really helping people will be
    able to get into the market, and they will get paid for it.”

      The key here is to seek out these opportunities and manage our risk accordingly.

      #3 – Trying to time the market

      According to Morningstar, since 1992, investors have poured assets
    into money market funds much more often leading up to elections. By
    contrast, equity funds have seen the highest net inflows in the year
    immediately after an election.

      This suggests that investors may prefer to minimize risk during
    election years and wait until after uncertainty has subsided to revisit
    riskier assets like stocks.