Savvy Investors Will View Any Market Correction as a Buying Opportunity
$DIA, $SPY, $QQQ
- Always be careful and keep political analysis seperate from company analysis.
With the midterm elections looming the chances are there could be some changes ahead. The President’s party tends to lose seats in mid-term elections, and with the GOP holding a slim lead in both houses we do not know how things will shake out in November
In the US Senate, many more Democrats are up for reelection than Republicans. And many of those Democrats are in states that President Trump won in Y 2016.
So, we may well see a GOP gainer in the Senate, and perhaps some losses the House, but the House is not clear yet, as the polls are unreliable, as they were leading up to the Y 2016 Presidential election.
So, unless Dems flip both houses of Congress with large enough majorities to carry out an agenda that can override President Trump’s veto power, not much is likely to change.
In that case the country will continue down the path of keeping taxes low and dismantling what is left of the Hussein Obama nanny (regulatory) state.
What causes short-term uncertainty in the markets is when politicians propose large and sweeping changes.
Politicians can help or hurt specific industries, and is easier to destroy than create, the financial market can create and destroy too.
Some investors will move to the sidelines and wait out the midterm results, some will bet with President Trump, some will bet against him.
But, the economy will continue to play out until new tax or regulatory changes come to pass no matter what the result. And that is true even if the Democrats win a super-majority and move to impeach our President.
So, if your investment strategy ignores politics, good for you. No need to be mired in that stuff.
But, if your investment strategy include political calculations, it may be time to rethink things carefully.
No matter what the outcome in November, the FDA will approve or reject drugs. New technologies will continue to be developed that have no regulatory framework to box them in. Established Aristocrat companies will continue lobbying politicians for proposals designed less to directly benefit them and more to keep competitors at bay.
Historically, the midterm frame in a President’s 1st term is the worst time for market performance, we are not seeing that in here. But over the long-term, sizable corrections of 8-12% end up as solid buying opportunities.
For those who were out the markets before the Y 2016 election, they missed a strong rally immediately.
So, if things go the way that have often done in the past, this November will be another buying opportunity.
If you are invested, stay invested, as the investment game is for the long haul, the near-term is for speculators.
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