If you’ve followed financial media outlets for the past few months, you undoubtedly subscribe to the notion of, “if Hillary wins then this, if Trump wins then that”.
In other words, it is “common knowledge” that a Trump win will tank the markets; while a Hillary win will act as a stabilizer. If you believe these statements to be true, then it would make sense to short the markets (if you believe Trump will be our next president) or long the markets if you’re expecting our next president to be Clinton.
I want to say a couple of things about the above statements. One, I find it ridiculous to ascribe a market reaction to our next president. The markets will do what it wants. Period! And two, shorting or longing based on who you think our next president will be is reckless; as you can not with any certainty predict the outcome of the elections. You just can’t and any “bets” made with this approach will -and should -be considered a gamble.
If you’re not into gambling then I suppose your next question is: well, how should I position myself for the election and the subsequent weeks? That should be a personal choice but take solace in knowing that you have the choice to do nothing. That’s right; you can go into this week all cash. Understanding, however, that you can’t make or lose money when you’re all cash.
It’s not an exciting approach but it is an option.
I have no intentions on opening any new positions this week but I will remain in trades I’ve had for the past several weeks. How do I plan on playing the markets going forward? Like I always do. Focusing on points of support and resistance. Ensuring I respect my position size, stops and max draw downs.
Whatever your choice going into the elections; be prepared to live with the outcome.
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