Prior to the 2016 election, I heard the following phrase about 1,000 times: “If Trump wins, the market is going to crash.” I thought it was such a ridiculous statement that I wrote an article for Yahoo Finance a month before the election saying that he was going to win, and that the market would take off. It was the second most read article on Yahoo Finance that month and I got an INSANE amount of hate for it. The funny thing is I wrote in the article that it was not a political statement. It was simply analysis, but no one cared. Once people saw the title, they were triggered beyond belief (because most people are complete lunatics about politics), and I received over 500 emails in less than 24 hours telling me I’m an idiot.
Well, I’m doing the same thing now. What I’m about to say is not political. It is simply analysis. Over the past two months, I’ve heard the following phrase hundreds of times: “If Harris wins, the market is going to crash.” Again, this is an absolutely ridiculous statement. I don’t know who’s going to win the election, but I do know one thing, the market is NOT going to crash. If you think it is, it’s because you’re probably too wound up in the politics. Like Warren Buffett says, “If you mix your politics with your investing, you’re making a big mistake.”
Why do I think the market is NOT going to crash? Four reasons. 1) The Fed is on the market’s side. They are cutting rates and pumping liquidity into the system. The Fed is WAY more important for the markets than who’s President. Remember, don’t fight the Fed. 2) Seasonality. November and December are traditionally two of the strongest months of the year. 3) Technicals. All the major indexes are above their key moving averages, showing that the big institutions continue to support the market. In addition, many of the market leaders are acting well. Remember, so go the leaders, so goes the market. 4) Gridlock. With a split Congress, very little is likely to get passed.
I know so many people who have pulled their money out of the markets because they’re brainwashed, hate a certain side, and/or are living in fear. Based on what I’m seeing and a lot of the unusual options activity, I think the market finishes the year strong AFTER the election NO MATTER WHO WINS because the uncertainty of the event will be behind us. I apologize in advance for being a voice of reason. If you want to send me hate mail, you’re welcome to do so.
I can be reached at: jfahmy@zorcapital.com.
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