Game Plan for the 2020 Presidential Election

As if this year hasn’t created enough uncertainty for investors, they must now prepare for a presidential election. While the candidates are familiar, the limited debates have prevented the average investor from getting clarity on polices that would affect the market.

The election will dictate where money flows for the next four to possibly eight years. While we can’t predict the outcome of the election, it’s worthwhile to go over scenarios and expectations so we can position our portfolios accordingly.

To properly prepare- you need to remove your bias!!!

Let’s face it, this is a divisive atmosphere and a heated election. To properly approach this topic, we must remove any bias and focus on the markets.

Below I discuss what we should expect before, during and after the election and how to invest and profit in the weeks and months ahead.

The Weeks Before the Election (October 12th-30th) 

The three weeks leading up to the election should be a time of caution. Some will be positioning themselves for what they expect might happen, but there will be a lot of investors who will not want to be exposed to the election results. This group would rather sit back and wait and see what happens, rather than taking potentially significant risk this election year.

The 2016 election saw a sell-off in the last two weeks of October before election week. During this time, the S&P shed about 2.5% and volatility spiked, with the VIX moving higher by over 20%. While the betting markets predicted an easy Clinton win, the options markets prepared for uncertainty anyway.

The Day and Night of the Election (November 3rd) 

The calm before the storm will come on Monday November 2nd, when traders back away from the action and await the results. Volumes will decrease into Tuesday when we will see rumors start to move the market up and down.

As official results come in, the stock market will be closed and the futures market will be responding to the headlines. The 2016 election result was a shock when Trump won and the news sent the S&P futures into a tailspin. However, it didn’t take long for investors to decide they liked Trump, and a big upwards reversal came the next morning. 

Continue . . .


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Revealed: Zacks’ Election Predictions

The election could spark a tremendous buying opportunity for savvy investors.

Zacks' 2020 Election Stock Report features 6 picks to own if Trump wins and 6 if Biden wins, based on their policy positions. They’re practically guaranteed to climb after the election, and early investments could see the greatest gains. Our previous reports led investors to gains of +71%, +83%, even +185%.¹ This year’s returns could be even more impressive.

The 2020 Election Stock Report is only available until midnight Sunday, September 27.

See Election Stocks Now >>

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If Trump wins: Expect a move higher in the futures and into the next day. The market will like Trump’s market friendly approach we have seen over the last four years.

If Biden wins: Look for a move lower overnight and the next day as the possibility of higher taxes will be a perceived negative. However, the market might shrug off a Biden win as a massive infrastructure bill would be appealing for short-term growth.   

The Days and Weeks After (November and December) 

The smart money will position themselves for the next couple years in the weeks that follow the election. In 2016, the S&P moved higher by over 6% from November into the end of the year.

After the election, investors should focus on the stocks that will benefit from winning candidate. Regardless of what the overall market does, favorable sectors will outperform based on that candidate’s policies.

If Trump wins: Market continues to rally, but volatility remains high as conflict with China remains.

If Biden wins: Energy and Wall Street struggle, while eco-friendly and tech thrive. Watch for gold to go higher as spending increases.

Wildcard

This election will be close and if there is no clear winner, the market will react negatively. I would expect the VIX to stay elevated as the winner is sorted out and the market to sell off until there is clarity.

In Summary 

Investors have seen a lot of uncertainty and volatility this year, so an unpredictable election seems to fit in perfectly. While certain areas of the market might struggle under Biden or Trump, both candidates should be viewed as market friendly. Investors have a win/win scenario with some short-term risks with Biden that would be cancelled out with the volatility of Trump.

Whatever the result, there will be money to be made. Investors should ready themselves and plan for the possibility of both candidates.

To help you do that, I've created a special report.  Zacks’ 2020 Election Stock Report provides specific recommendations for both potential outcomes. Each pick – 6 if Trump wins, 6 if Biden wins – has substantial profit potential. Investors that act quickly stand to reap the biggest benefits.

Just before the 2016 election, I released a similar report. My recommendations outperformed the market with gains of +53%, +70%, +71% and +83% in the months following the election.¹ With the way the market looks right now, the picks in this year's report could be even more lucrative.

You’re invited to download the 2020 Election Stock Report now. But don’t delay. We’re only making it is only available until Sunday, September 27.

Click here to claim your copy of Zacks’ Election Stock Report >> 

Good Investing,

Jeremy Mullin
Stock Strategist

Jeremy Mullin has been a professional trader for more than 15 years with specific expertise in profiting from patterns set by High-Frequency Traders. He is the editor of Zacks Counterstrike.

¹ The results listed above are not (or may not be) representative of the performance of all strategies developed by Zacks Investment Research.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.