Politics, news and market moves. Whether it's a terrorist attacks abroad, threats of war from foreign leaders, elections or acts of mother nature, there are many unexpected news events that have preceded huge sell offs in the stock market. In the face of much of this distressed news throughout the past decade, the Dow has continued to soar and make higher highs. How was that possible? There is a intertwined correlation between political situations and the stock market. Sometimes politics seems to have a direct impact on the market movements, other times none whatsoever.
Take the “Trump Tsunami,” for instance, when the stock market exploded and skyrocketed immediately after President Trump won the 2016 presidential election. In general though, politics has very little effect on the stock markets long term movements, other than short term spontaneous pop and drop reactions.
Take the “Trump Tsunami,” for instance, when the stock market exploded and skyrocketed immediately after President Trump won the 2016 presidential election. In general though, politics has very little effect on the stock markets long term movements, other than short term spontaneous pop and drop reactions.
When considering whether politics has impacted the market or not, it is important to differentiate between causes and effects. Investors are sometimes pumped up by an election of a particular candidate, such as Donald Trump, who seemed to have effectively shifted the political wind of the international order. The current state of the modern media environment mutes much of the impact of most events in the market. There is so much biased news today put out by certain media outlets that the market doesn’t seem to be impacted by a majority of it. By learning to tune out the noise from what's relevant is an important skill to have to becoming a great trader and investor. I also need to remind you that the financial media's main mission these days is not the quality of the news to help you succeed as a trader or investor, but instead to generate as many digital clicks or ad sales they can get.
One thing we know for sure, the stock market does not like a lack of confidence and the market been hammered many times amid a series of potentially volatile political events, including the debates over raising the debt ceiling, possible government shutdowns, developments over trade and, factors other than political ones are always at play. Among the many factors that influence stock market pops and drops are company earnings announcements, interest rates chatter and miscalculations on the world's economy.
It is prudent to stay aware of the reasons for a markets pop or drop, and not attribute too much meaning to a single particular event. Again, the real mover of markets are revenue and a companies earnings growth, If big corporations continue to move the needle forward and continue to grow their revenues, the market will trend higher. We view corporate earnings as a bullish or bearish indicator. If they are better than anticipated the markets will move higher. Not so good, it will trend lower. However, smaller traders shouldn’t get too caught up on every pop and drop of the stock market, instead they should look at the big picture and keep their overall investment strategy in focus, continue to practice good and prudent trading habits, while you weather market shifts and political whirl winds.
We tell our members not try to political proof their portfolios. If you think about several political crisis over the last few years - like debt ceiling negotiations between political parties, when you take a closer look you'll notice they much of it turned out to be non-events for the market. No matter who is in the White House, there are plenty of stocks at any given time that are good, worthwhile investments. We advise our subscribers to remember that it is earnings, not politics, that moves the stocks. The few times politics really affected the ebb and flow of the markets, was when it modified the economic landscape where corporations were doing business. So, as a rule of thumb - it's not until the political policies materially affects the way a particular company or sector does its business is there a cause for great concern. Investors just need to learn to put all the short term noise on the back burner.
Yes, sometimes politics does affect the stock market, but the real reason for the political effects of the market is when politics and the stock market are economically related, like when the tax cuts were announced, it was positively related to the markets move higher. It is pre and post elections, like in todays environment, that investors must keep a wakeful eye on breaking developments. For many stock investors, politics still remains a huge factor in their investment making decisions.
We should all keep in mind that political shifts can move markets, but even under booming economic conditions and vigorous fundamentals the market regularly experiences 2 to 3 corrections a year. So, remaining diversified in the correct stocks is always the best method to help ride out the inevitability of a large swing in the market. As a stock trader you need to follow your convictions. But, your opinions and beliefs need to be able to change in the blink of an eye, if need be. Will Congress or state legislatures pass a law that will have a negative impact on a particular stock owned?...an industry, a sector, or the economy as a whole?
In a nutshell, politics is growing more personal, polarizing and insidious. This will likely get worse before it gets better and as the Republican and Democratic mid-term elections get under way, get ready for an ugly scene. The campaigns may be interesting to watch, but they not going to be pretty ones. How will these political adjustments impact the stock market? If you have a solid investment plan in place, like the methods we are executing for our members, with adequate diversification, we say that you make no moves based on supposed election theories. We are in uncharted political territory these days. So, sit back relax and watch the spectacle unfold, but hold on tight! Outcomes and predictions based on political shifts this fall are just pure speculation.
As we previously mentioned, we embolden you to Join our FREE E-Newsletter and we will give you our trading perspective that will help you outperform the stock market and place better trades. Again, take advantage of our 14 Day FREE Trial and get 2 weeks worth of FREE trading signals on stocks that are poised to move higher.
One thing we know for sure, the stock market does not like a lack of confidence and the market been hammered many times amid a series of potentially volatile political events, including the debates over raising the debt ceiling, possible government shutdowns, developments over trade and, factors other than political ones are always at play. Among the many factors that influence stock market pops and drops are company earnings announcements, interest rates chatter and miscalculations on the world's economy.
It is prudent to stay aware of the reasons for a markets pop or drop, and not attribute too much meaning to a single particular event. Again, the real mover of markets are revenue and a companies earnings growth, If big corporations continue to move the needle forward and continue to grow their revenues, the market will trend higher. We view corporate earnings as a bullish or bearish indicator. If they are better than anticipated the markets will move higher. Not so good, it will trend lower. However, smaller traders shouldn’t get too caught up on every pop and drop of the stock market, instead they should look at the big picture and keep their overall investment strategy in focus, continue to practice good and prudent trading habits, while you weather market shifts and political whirl winds.
We tell our members not try to political proof their portfolios. If you think about several political crisis over the last few years - like debt ceiling negotiations between political parties, when you take a closer look you'll notice they much of it turned out to be non-events for the market. No matter who is in the White House, there are plenty of stocks at any given time that are good, worthwhile investments. We advise our subscribers to remember that it is earnings, not politics, that moves the stocks. The few times politics really affected the ebb and flow of the markets, was when it modified the economic landscape where corporations were doing business. So, as a rule of thumb - it's not until the political policies materially affects the way a particular company or sector does its business is there a cause for great concern. Investors just need to learn to put all the short term noise on the back burner.
Yes, sometimes politics does affect the stock market, but the real reason for the political effects of the market is when politics and the stock market are economically related, like when the tax cuts were announced, it was positively related to the markets move higher. It is pre and post elections, like in todays environment, that investors must keep a wakeful eye on breaking developments. For many stock investors, politics still remains a huge factor in their investment making decisions.
We should all keep in mind that political shifts can move markets, but even under booming economic conditions and vigorous fundamentals the market regularly experiences 2 to 3 corrections a year. So, remaining diversified in the correct stocks is always the best method to help ride out the inevitability of a large swing in the market. As a stock trader you need to follow your convictions. But, your opinions and beliefs need to be able to change in the blink of an eye, if need be. Will Congress or state legislatures pass a law that will have a negative impact on a particular stock owned?...an industry, a sector, or the economy as a whole?
In a nutshell, politics is growing more personal, polarizing and insidious. This will likely get worse before it gets better and as the Republican and Democratic mid-term elections get under way, get ready for an ugly scene. The campaigns may be interesting to watch, but they not going to be pretty ones. How will these political adjustments impact the stock market? If you have a solid investment plan in place, like the methods we are executing for our members, with adequate diversification, we say that you make no moves based on supposed election theories. We are in uncharted political territory these days. So, sit back relax and watch the spectacle unfold, but hold on tight! Outcomes and predictions based on political shifts this fall are just pure speculation.
As we previously mentioned, we embolden you to Join our FREE E-Newsletter and we will give you our trading perspective that will help you outperform the stock market and place better trades. Again, take advantage of our 14 Day FREE Trial and get 2 weeks worth of FREE trading signals on stocks that are poised to move higher.
Until next time... Happy Trading!!!
