Historically, an election year brings a lot of volatility in the stock market. This year financial markets dealt with not only a contentious presidential election, but also the uncertainty of a global pandemic.
“The financial markets hate uncertainty, so during particularly a presidential election, the result of a presidential election can have a real negative or positive result on the financial markets,” Neil Graff, the president of Graff Capital said.
While that’s been true every four years in America, there’s even more uncertainty right now.
“This year during this election process, there’s been an important variable thrown into the mix–that’s the COVID virus. That really has had more effect on the markets than the presidential election,” Graff said.
While there was a slight drop in the market the week before the election, it went up even during the week of waiting for results.
“We saw the market go up substantially last week probably more in response to the vaccine,” Graff said.
Neil Graff with Graff Capital says these knee-jerk reactions shouldn’t worry the average investor.
“People make their contributions on a weekly, bi weekly, monthly basis, and they put their money into their 401ks regardless of who’s president, regardless of market uncertainty, regardless of the state of the market,” Graff said.
Graff says the wisest course of action is always to continue your regular investments no matter what the market is doing.
“I don’t know if you can ever determine the most appropriate time to invest. My thought would be invest in the market, let the market provide returns, rather than trying to time the markets and get returns based on going in and out of the market,” Graff said.
Graff also says COVID is bringing about some new norms in the world of investing that is constantly evolving, which will continue to impact many portfolios over the coming months.