“Charlie Munger and I always knew we would become very wealthy, but we weren’t in a hurry. Even if you’re a slightly above average investor who spends less than you earn, over a lifetime you cannot help but get very wealthy — if you’re patient.”
Predicting short-term market moves is generally futile, but making general assumptions and/or recognizing short-term market overreactions will help you sleep at night and sometimes lead to opportunities.
You have heard me say this before, but as investors we must be aware of political market drivers, but we can’t let our on political leanings confuse our investment judgement.
Whoever wins the presidential election in November whether it’s Trump or Clinton, I expect there to be a market correction either to the upside or downside, but either way I see it as a gross overreaction.
The most likely scenario I believe is that Clinton wins the election and markets get a temporary bump that it unwarranted. That bump or upside market correction, pulls back over the following ~month even if the current bull market continues to run.
The more interesting scenario that I see happening, and one that I think would warrant a tactical investment play is a Trump win followed by a downside correction. It seems incredibly plausible to me that if Trump wins, markets will correct to the downside, then after the smoke clears bounce right back.
At the end of the day, both candidates are most likely to not be nearly as good or as bad as some might think in the short-term. Either ways sentiment will shift a great deal right around the election and that will move markets, however over the long-term the supply pressures will overwhelm the demand pressures in the market.
Half of the American population will be convinced the world is coming to an end no matter how the election plays out, but they will most likely be pleasantly disappointed when the election results in a continuation of the status quo and not an apocalypse.
“There is virtually always an apocalypse du jour going on somewhere in the world. And on the rare occasions when there is not, journalism will simply invent one, and present it 24/7 as the incipient end of the world.”
