Why the Election Doesn’t Matter.

By Jani Ziedins | End of Day Analysis

Nov 04

End of Day Analysis:

A little weakness on election day, but this was expected. We’ve come a long way in a short period of time. Resting here is normal and healthy.

Uncertainty on election day is also fairly typical as those who wanted to trade their predicted outcome have already made their bets and those that are not sure will wait until tomorrow to trade the result. This creates a lull in trade on the day of.

If the GOP wins the Senate, or doesn’t win the Senate, it doesn’t really matter to the market. After a few days of volatility and partisan pouting, it will move on to whatever comes next, like November’s economic and jobs data.

If anyone doubts this, just consider the last election cycle. The market initially cratered off on Obama’s reelection as emotional partisan traders sold in droves. But they missed out when the market rallied 42% over the next 2-years. This caught the partisan biased traders flat-footed when they assumed another four years of “socialist rule” would ruin the economy.

In truth, a divided federal government is good for markets because that leads to gridlock, status quo, and predictability. No matter what happens with the Senate, not much will get done with Obama’s veto stifling the Republican agenda so we should have a fairly predictable two-years left until the more meaningful presidential election cycle.

Jani

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About the Author

Jani Ziedins (pronounced Ya-nee) is a full-time investor and writer who has successfully traded stocks and options for more than a decade. He earned a B.S. in Mechanical Engineering from the Colorado School of Mines and an MBA and M.S. Marketing from the University of Colorado Denver. His prior professional experience includes manufacturing engineering at Fortune 500 companies, structural engineering, small business consultant, collegiate instructor, and managing investment real estate. He is now fortunate enough to trade full-time from home, affording him the luxury of spending extra time with his wife and two young children.